Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — TRANSPORT

Newbury Bypass

Mr. David Martin: To ask the Secretary of State for Transport what is the likely starting date for the construction of the Newbury bypass. [643]

The Minister for Railways and Roads (Mr. John Watts): Tenders will be invited for the main works contract on Friday 1 December. We aim to start the main works as soon as possible in 1996. We have already carried out all the necessary demolition of buildings on the route and clearance of the rest of the site will take place before the main works begin. Construction should then be completed within two years.

Mr. Martin: I congratulate my right hon. Friend the Secretary of State on keeping the scheme in the roads programme during a difficult public expenditure round. He knows how important the road is for those who live and work in Newbury and all points south, including Portsmouth, as a connection with the midlands and the north. Will the Minister ensure that what he has said today is well publicised, as there has been considerable trouble making by the Liberals, who have been doubting the Government's intention to proceed with the scheme?

Mr. Watts: Trouble making by Liberals or anyone else is much to be deplored. The former Secretary of State, my right hon. Friend the Member for Peterborough (Dr. Mawhinney), announced in July that the road would go ahead. My right hon. Friend the present Secretary of State made the same announcement in October. I do not know how many times we need to say so, but go ahead it will.

West Coast Main Line

Mr. Nigel Evans: To ask the Secretary of State for Transport how many passengers used the west coast main line in 1994. [644]

Mr. Watts: I understand that some 11 million passenger journeys were made on InterCity West Coast services during the financial year 1994–95.

Mr. Evans: That is an excellent figure, but does my hon. Friend agree that it would improve greatly if we invested the sums necessary to upgrade the west coast main line as quickly as possible? It is important strategically to the United Kingdom for manufacturing and tourism and for places such as Manchester which

wish to attract the Commonwealth games and, one hopes, make a successful bid for the Olympic games in future. Can my hon. Friend say exactly when the west coast main line will be upgraded, as the speed with which that happens is important for those of us who live in the area?

Mr. Watts: My hon. Friend is right to point out the importance of that key line. The contract for the development of the new state-of-the-art signalling system is on line to be let by Railtrack early next year. Next year, Railtrack also intends to let contracts for the main infrastructure works to the track and power supplies.

Mr. Olner: Surely the Minister realises that the past two years of dithering, during which money has been promised but not spent, has meant that many of those 11 million passengers arrived late or had their services cancelled. When will he take action to get the promised money in place?

Mr. Watts: Railtrack continues to spend substantial money on the west coast main line every year. As I have just explained to the House, the key to the upgrade project is the development of the new signalling system. It has been put out to tender, there has been enormous interest from the private sector in developing a new system under the private finance initiative and the contracts will be let early next year. The contracts for the main upgrading work will also start to be let in the course of next year.

Mr. Gill: Is my hon. Friend prepared to analyse the 11 million passengers to discern how many of them join the west coast main line at Birmingham international or Wolverhampton because of the withdrawal of the inter-city line to Shrewsbury? In his future deliberations, will he consider extending electrification from Wolverhampton to Shrewsbury so that my constituents in that county town can be served by an inter-city electrified service?

Mr. Watts: I do not have at my fingertips the information that my hon. Friend requires, but I shall certainly draw his remarks to the attention of Railtrack.

Rail Privatisation

Mr. Janner: To ask the Secretary of State for Transport what are his proposals for the privatisation of the rail industry. [645]

The Secretary of State for Transport (Sir George Young): Our proposals are to improve the efficiency of the railways by transferring the British Rail businesses into the private sector. The rolling stock leasing companies—Roscos—and some of the other businesses have been sold, the first franchises are on course to be awarded next month and we are on course to privatise Railtrack in the spring of 1996.

Mr. Janner: Has the right hon. Gentleman read the decision of Mr. Justice Brooke in the case brought by the Save our Railways group against passenger rail franchising, in which the judge granted a judicial review? Does he propose to respect the decision of the High Court and to postpone franchising while the review takes place, or will he once again do what the Government do so often, which is simply attack the judge because he disagrees with the judge's decision?

Sir George Young: As the hon. and learned Gentleman may know, the Government were not a party to the


decision—it was against the franchising director of the Office of Passenger Rail Franchising. As a barrister, he will understand that the court has done no more than decide that there is a case which should be considered in more detail. The decision does not affect the franchising process, which is going well, and the first franchises are due to be awarded before the end of the year. It is business as usual. We are confident that Opraf has a strong case and that the court will recognise that.

Mr. Waller: I am sure that my right hon. Friend agrees that the best basis on which to judge privatisation is the quality of service to customers. Does he also agree that the rolling stock companies are now thinking of developing innovative new trains that would make use of information technology to provide the very best service, comparable with that currently enjoyed by airline passengers?

Sir George Young: My hon. Friend is absolutely right. The rolling stock companies, now in private sector hands, have an appetite for investment and access to the necessary funds. I am confident that, as with all previous privatisations, investment will increase after privatisation and be higher than it would have been had BR remained in the public sector.

Mr. Chidgey: Will the right hon. Gentleman confirm that not all the track access charges have been fully expended by Railtrack on the repair and renewal of the rail infrastructure? Will he call for a report from the Rail Regulator, setting out what actions should be taken to deal with the matter, before the proposals for the privatisation of Railtrack are completed?

Sir George Young: As I am sure the hon. Gentleman knows, the Rail Regulator, John Swift, has all the powers that he needs to ensure that the provision made for track access charges under the Railtrack regime is spent on that purpose.

Mr. Robathan: Is my right hon. Friend aware that, before the war and before rail nationalisation in 1947, there were about 15 railway stations in my constituency, yet under a nationalised British Rail all those stations were closed, although one—but only one—has now been reopened? Does he agree that it is extraordinary that people should now try to defend British Rail, whose history has been one of decay, closure and inefficiency, and which has been the butt of endless jokes for the past 48 years?

Sir George Young: My hon. Friend is absolutely right. I am confident that under a privatised railway we will reverse the decline in the use of the railways over the past 40 to 50 years. My hon. Friend will be interested to know that, since 1979, 224 stations have been opened or reopened—a record that knocks into a cocked hat the record of the Labour party when it was in government.

Ms Short: The minimum conditions laid down for the initial franchises to run rail services do not meet the requirements of the Government's own legislation—which is that they be based on the timetable operated by British Rail immediately prior to franchising. Will the right hon. Gentleman confirm that on many inter-city services there have been cuts of a third or more and that, in the case of the Gatwick express, services are to be slashed from every 15 minutes to every 30 minutes, with no requirement that there be any trains after 8 o'clock?
The right hon. Gentleman should not wait for the courts to force him to comply with his own legislation; instead, he should halt the privatisation process and not restore it unless and until he can provide services under privatisation that are at least as good as current services.

Sir George Young: It is for the judge, not me, to decide the response to the hon. Lady's first question. However, I said in my earlier reply that Opraf was putting forward the case with vigour.
On the hon. Lady's substantive point, I wonder whether she has read the Transport Select Committee's report—which was unanimous—which says about the very issue that she raised:
We agree that franchisees must be allowed some flexibility in the provision of services and in operational matters. We also have no objection in principle to the omission of profitable services from PSRs, since it will be in franchisees' interests to provide them.

Mr. Congdon: Given that British Rail is hardly an example of a well-run organisation that puts the interests of its customers first, does my right hon. Friend agree that much can and will be gained by its privatisation? Does he also agree that the Opposition Members who opposed the privatisation of British Airways are also among those who are opposed to the privatisation of British Rail? Is it not the case that they were wrong then and that they are wrong now?

Sir George Young: My hon. Friend is absolutely right. He may have seen with some astonishment the statement by a shadow transport spokesman that a Labour Government would confiscate a franchise even if the franchisee were providing a better service to the passengers at a lower cost to the taxpayers. That is the absurd dogma presented by the Labour party. It is also the case that the Labour party opposes privatisation but, when an industry is successfully privatised, Labour-controlled local authorities then invest in the privatised industries and share in those industries' growth and success.

Urban Congestion

Mr. Jon Owen Jones: To ask the Secretary of State for Transport what plans he has to act to reduce urban congestion. [646]

The Minister for Transport in London (Mr. Steve Norris): Local authorities are best placed to tackle the problems caused by urban congestion in their areas. The Government will continue to assist through the resources that they make available to local authorities for transport investment.

Mr. Jones: If it is all down to local authorities, why did the former Secretary of State for Transport say in his comments to the Transport Select Committee that the Government needed to address that matter? During the past 16 years, we have seen continuous growth in the number of vehicles on our roads, and the roads cannot take it, especially those in our cities. Urban congestion is probably the largest transport issue, yet the Government are complacent and do nothing except deregulate buses. Bus deregulation puts more coaches on to the roads but they have fewer passengers in them, which is the very opposite of what is needed.

Mr. Norris: It may be that confinement to the Whips Office has blunted the hon. Gentleman's appreciation of


the great transport debate which the previous Secretary of State for Transport initiated and to which many Opposition Members responded enthusiastically. It may come as a further disappointment to the hon. Gentleman to know that the broad principles of that debate are well established and that local authorities across the country welcome the package approach to the local transport settlement. They see it as the right way forward which brings a comprehensive local transport solution. Incidentally, they have been enthusiastic applicants for the package in this year's settlement round.

Sir David Mitchell: On congestion, may I revert to the Newbury bypass and ask whether my hon. Friend will take effective action to stop the bypass being obstructed by those who flout the law?

Mr. Norris: Yes, Madam Speaker.

Mr. Allen: Is the Minister aware that one of the best ways to reduce congestion might be to encourage the greater use of school buses and coaches but that, to do that, we need to convince parents that using school transport is better than taking children to and from school in the morning and evening? Will he therefore consider introducing legislation to make the wearing of seat belts on school buses compulsory? Will he also ensure that old vehicles are brought up to standard so that parents are reassured? I hope that he will not hide behind the European Community, as this matter is entirely within the competence of the British Government. Will he please ensure that they introduce the relevant legislation?

Mr. Norris: The hon. Gentleman is right to say that school transport is important. About a third of all vehicles on the road in the morning rush hour are said to be school journey related. He is equally right to say that such journeys would be better undertaken by more efficient forms of transport such as the school bus. Sadly, however, he is wrong to suggest that the problem lies in the compulsory wearing of seat belts. I warn him not to take that course. If it is a commitment that he is making on behalf of his party, I should be interested to hear him expand on it.
If the hon. Gentleman is referring to the fitment of seat belts, which might be a more accurate expression of his question, he should know that the legal position is that this country is, in fact, leading the way in Europe. This is the one country that has understood the importance of such a development for schoolchildren everywhere and it is making excellent progress, despite the best efforts of the Commission, to ensure that the measure is implemented at the earliest possible date. I hope that it is something in which the hon. Gentleman at least will be prepared to take a little pride.

Sir Peter Emery: Will my hon. Friend, who I know is very concerned about congestion in cities, consider the worsening situation caused by the growing number of articulated vehicles being used for daytime deliveries, often in very crowded areas of a city? Will he consider bringing about powers so that, in certain areas, deliveries are limited to 30 cwt vans rather than massive articulated lorries?

Mr. Norris: My right hon. Friend makes a valid point. It is indeed of concern to us that so much of the problem, in our medieval towns particularly, is caused by heavy vehicles. Several local authorities have now instituted arrangements whereby deliveries can be made only early

in the morning or late at night. In fact, we are looking at the proposition of having a general distribution depot located on the fringe of a town from which journeys into the town could be made by much smaller vehicles. My right hon. Friend is on to a very good point.

Marine Safety

Mr. Denham: To ask the Secretary of State for Transport if he will make a statement on the role of the Marine Safety Agency on ensuring compliance with the safety of life at sea—SOLAS—and health regulations. [648]

Mr. Norris: The Marine Safety Agency aims to ensure the compliance of United Kingdom ships with international ship safety standards. It also checks a proportion of foreign ships calling at UK ports for compliance with those standards. It has similar functions for standards of food hygiene and supply, and catering facilities for crews on board ships. Of course, the application of public health and food hygiene regulations to passenger areas is a matter for port health authorities.

Mr. Denham: Will the Minister confirm that the United States coastguard report on the QEII's arrival in New York in December criticised the Marine Safety Agency, called for action against it, and said:
I do not see how any country could interpret Safety of Life at Sea regulations as was done in this case."?
Although the QEII's problem voyage is—thankfully—history, does not that disturbing episode raise a question about the ability of the Marine Safety Agency to guarantee safety for passengers stepping aboard any vessel leaving any port in this country? Is not a top-to-bottom shake-up of the MSA required, so that it does what the Minister says that it does, and ensures that regulations are interpreted in this country as they are in the United States and other countries?

Mr. Norris: In my experience, the MSA does a first-class job, as, I would think, the majority of the hon. Gentleman's constituents employed in the marine industry might have occasion to tell him. As he knows, the MSA is conducting an investigation into the matters surrounding the QEII sailing in 1994. My understanding is that that report will be issued shortly.

Mr. Matthew Banks: May I congratulate my hon. Friend and the Government Front-Bench team on their response to the recent Transport Select Committee report in relation to safety at sea? Does my hon. Friend agree that it is important that the Government work at international level to raise safety standards on our seas, because passengers do not simply travel on safe British ferries?

Mr. Norris: My hon. Friend is entirely right. He will know, as I do, that the Government's intention is to apply the highest possible standards in that regard and that the International Maritime Organisation is currently in session discussing that very topic.

Pedestrian Crossings

Mr. Simon Coombs: To ask the Secretary of State for Transport how many pedestrians have been killed at pedestrian crossings in the past five years; and if he will make a statement. [649]

Mr. Norris: In all, 541 pedestrians were killed at crossings in Great Britain between 1990 and 1994, but there was a 25 per cent. decline in the yearly totals over the same period.

Mr. Coombs: Does my hon. Friend agree that, although those figures obviously show very satisfactory progress in the right direction, they are still far too high? Frankly, should we not expect that pedestrian crossings are safe places for pedestrians to cross roads? Will my hon. Friend therefore initiate discussions with representatives of the police and ask them to give closer attention to monitoring the behaviour of motorists and pedestrians at such crossings to enable improvement of the figures still further in future?

Mr. Norris: I will, of course, bear very much in mind what my hon. Friend has said. I should point out to him one or two important matters. First, pedestrian fatalities are at their lowest level since records began in 1926. Secondly, a Uniroyal survey showed that about 90 per cent, of pedestrians who used signalled crossings, including pelican crossings, crossed the road against the red pedestrian stop light; perhaps pedestrians should bear that in mind. The survey also showed that 95 per cent. of all motorists in London stopped immediately at a zebra crossing when pedestrians were waiting to cross.

Mr. Barnes: Are cameras not one of the most effective ways in which to control traffic, because drivers then obey the rules? Would it not be fruitful to have more cameras in the vicinity of pedestrian crossings to ensure that people's behaviour there was correct? Would it not be helpful, therefore, for the Government to supply county councils and others with the funds to install cameras?

Mr. Norris: The hon. Gentleman raises an interesting point. It is certainly true that camera technology has helped us tremendously with speed reduction. It has saved dozens of lives and it has overcome any initial reservations about its use. We have in mind the extension of camera technology for precisely the reasons that the hon. Gentleman outlined. I hope that he will appreciate that I cannot give undertakings at this stage about the untried project to which he referred. However, we bear it very much in mind.

Sir Irvine Patrick: I thank my hon. Friend. What steps is he taking to ensure that councils, such as Sheffield, adequately illuminate pedestrian crossings and deal with dangerous junctions, such as the one at Abbey lane and Abbeydale road south where another serious accident took place as recently as last Saturday?

Mr. Norris: Guidelines are published by my Department on the installation of pedestrian crossings and one of the matters that are considered is their illumination. My hon. Friend is right to draw to the House's attention the fact that, for every local authority, there can be no more important function than trying to reduce the utterly needless waste of 70 lives which, tragically, are still lost on our roads each week.

West Coast Main Line

Mr. Rooker: To ask the Secretary of State for Transport what is the timetable for upgrading of track and signals on the west coast main line. [650]

Mr. Watts: The tendering process for the new signalling system is well under way. Tenders have been

received and Railtrack is aiming to let the contract early next year. Railtrack expects to let the main contract for upgrading the west coast main line during 1996. The whole modernisation programme is expected to take around eight years to complete.

Mr. Rooker: I thank the Minister for that answer. May we have a commitment, in so far as it is possible to give one, that the priority in upgrading the west coast main line will be the stretch between London and Birmingham? The Birmingham loop is a disaster and it tends to be neglected when the west coast main line is discussed. Given that in that city we have the national indoor arena, the national exhibition centre and the international convention centre, which were all put there without central Government funds, whereas other parts of the country, especially the north-west, have had some financial featherbedding, the Government must give a commitment that the priority will be the Birmingham-London stretch of the west coast main line.

Mr. Watts: I do not wish to add to any inter-regional strife between Opposition Members. The hon. Gentleman is right: the southern stretch of the west coast main line was modernised furthest back in history and is, therefore, a priority. Services to Birmingham will be a priority within the overall project.

Mr. Brandreth: Can my hon. Friend confirm that, over the past five years, there has been £6 billion of investment in our railways? Does he agree that the west coast main line is a priority overall, including the stretch to Crewe and off to Chester? We need investment from Government, from the European Union and especially from the private sector to ensure that we have a superb main line railway service from the south up to and into the heart of the north-west.

Mr. Watts: My hon. Friend is right to say that the west coast main line modernisation is the biggest and most important project in the domestic railways.

Transport (London)

Mrs. Bridget Prentice: To ask the Secretary of State for Transport what is his estimate of the financial benefits to business of London's public transport system. [651]

Sir George Young: London's public transport system brings great benefits to both business and individuals, as was confirmed in the independent Healy and Baker 1995 report on Europe's top cities, in which London came first in terms of both international and external transport.

Mrs. Prentice: Given that the direct benefit of the London underground network to London is some £1.2 billion and to the economy as a whole is some £2 billion, why are the Government cutting London Transport's grant by about 32 per cent. in the next three years? Was the Secretary of State's warning, that London Underground's core funding will be threatened in tomorrow's Budget, true?

Sir George Young: The hon. Lady will have to wait until tomorrow to see what my right hon. and learned Friend the Chancellor has to say. Investment in London Underground in the past three years has been higher than at any time in the previous two decades. That puts a slightly different gloss on the picture painted by the hon. Lady.

Mr. Dykes: May I once again welcome the construction of the Jubilee line extension, which will take the route from docklands to the terminus in my constituency? There is already an excellent service on that line, with trains running at a maximum of every seven minutes during the daytime. Will my right hon. Friend confirm that the number of jobs created originally by that massive scheme—opened by my hon. Friend the Minister for Transport in London—has increased at the margins since then? Many business people use the service now, and an increasing number will use it in the future. Will my right hon. Friend press for additional new rolling stock for the Metropolitan line for similar purposes? I have no Nolan interest to declare.

Sir George Young: I welcome what my hon. Friend has just said. The substantial sum of money invested in the Jubilee line is an example of our commitment to investing in London, and that has been aided by some private finance initiatives for the Isle of Dogs. I shall raise the second part of my hon. Friend's question with London Transport. The securing of additional stock for the Northern line, which will come on-stream early next year, is another private finance initiative, and I am anxious to pursue other private finance initiatives with London Transport as fast as I can.

Railways

Mr. Hall: To ask the Secretary of State for Transport if he will make a statement on the condition of Britain's railways. [652]

Sir George Young: Recent high investment and increased efficiency have brought real improvements to our railways. Privatisation will build on this and stimulate further improvements in the quality of infrastructure and services.

Mr. Hall: The whole focus of the Tory party's transport policy has been on disfranchising the travelling public through deregulation, fragmentation and privatisation. The policy has been driven by the desperate search for tax cuts and by Tory party ideology. Railtrack is not sure whether it or the contractor is responsible for safety on the railway lines. When the Government sold off the rolling stock earlier this month for £1.3 million, they did not place it under the control of the Rail Regulator. Will the Secretary of State give an undertaking this afternoon to intervene to ensure that the rolling stock comes under the control of the Rail Regulator so that we can have proper investment in the railways in the future?

Sir George Young: I do not agree with the hon. Gentleman's allegations. The consumer now has two guarantees that he never had before: first, key fares will not rise in real terms in the next three years; and, secondly, the services spelt out in the passenger service requirements will not be withdrawn during a seven-year period. Those are guarantees to the customer that were never given by the Labour party.

Mr. Hawkins: Does my right hon. Friend agree that what we have heard from the hon. Member for Warrington, South (Mr. Hall) is the authentic voice of the trade union-dominated Labour party, which is far more interested in the concerns of the rail unions than in those of the travelling public? Opposition Members may

suggest that things were good in the nationalised railway, but the Government have produced a customer and passenger-centred railway.

Sir George Young: My hon. Friend is quite right. Under Labour, rail fares rose by more than 22 per cent. in real terms. One may contrast that with our guarantee that, from January, there will be no increase in real terms in key fares.

Mr. Wilson: I was amused to hear the Secretary of State quoting earlier from the all-party Select Committee report on rail privatisation. Will he recognise now that the central finding of that report was that it would cost an extra £700 million a year to maintain the same level of service as exists at present—not one extra service or one extra train? Can the Secretary of State explain to the House—including his own increasingly sceptical Back Benchers—why on earth, when everything else is being cut, he is prepared in the name of dogma to pay an extra £700 million a year for no improvement in service? Before he does so, will he answer the question that he avoided earlier? Will he give an undertaking that no franchises will be let to failed double-glazers or anyone else in advance of the High Court ruling?

Sir George Young: As I am sure that the hon. Gentleman would expect, the Government will reply to the Transport Select Committee's report in the normal way. I will forward our response in the next day or so. It will then be up to the Select Committee to publish it in the normal way. The hon. Gentleman will then get a response to the first point that he raised. For the record, the Government have never accepted that figure of £700 million. I hope that the hon. Gentleman will explain at some point exactly what he meant in The Daily Telegraph when he said:
Nobody should be in any doubt about our commitment to a publicly owned and accountable national railway network.
There is considerable doubt on the hon. Gentleman's own side, among ASLEF and the RMT, as to whether that commitment means anything. Until we hear from Opposition Front-Bench Members what they intend to do to deliver their conference resolution to renationalise the railways, nothing that they say on the railways will be taken with any seriousness whatever.

Dr. Spink: Will my right hon. Friend confirm that the condition of British railways will be improved by the Government's comprehensive policies? Does he agree that it will be improved in particular by the policy to privatise rail, which will bring forward rolling stock orders, thereby helping the travelling public, environmentalists and our industry, and by the policy to stabilise and reduce rail fares, which will bring more passengers on to the rail service and bring in more income, which can then be used for investment?

Sir George Young: I agree with my hon. Friend, particularly about investment. Last week, I opened the RailTex exhibition at Wembley, at which there were more exhibitors this year than last. There were more new products and there was a real appetite among train operators and those in the railway industry for privatisation. They see it as unlocking fresh investment in an industry which is now ending decades of decline, and which will be revitalised under privatisation.

Transport (London)

Ms Glenda Jackson: To ask the Secretary of State for Transport what plans he has to improve the transport system in London. [653]

Mr. Carrington: To ask the Secretary of State for Transport what proposals he has for improving public transport in London. [654]

Mr. Norris: The Government plan a continuing high level of investment in London's transport system, with increasing benefits to passengers from greater efficiency and increased private sector involvement.

Ms Jackson: What confidence can any Londoner have in the Minister's reply? Since 1991, his Government have broken every funding promise that they have made to London Transport so that we now see in London a deterioration of services and a year-on-year rise in fares. What guarantee can he give to Londoners that they will not see yet another reduction in funding to London Transport in tomorrow's Budget?

Mr. Norris: I suppose I might offer to Londoners the fact that, at 1995–96 prices, investment in London in 1975 was £241 million. By 1979, it had grown to a staggering £257 million. It is now running at £1,085 million. That might be some reassurance even to Londoners exposed to a constant diet of misinformation from the hon. Lady.

Mr. Carrington: Will my hon. Friend review his Department's policy on funding the introduction of bus lanes? There is no doubt that, on the right roads, bus lanes are extremely beneficial, but in the wrong place they can cause serious damage to the local businesses in that road; that is particularly so in Fulham high street. Before he funds the introduction of any more bus lanes, will my hon. Friend seriously consider the cost benefits of bus lanes and in particular their impact on the local communities through which they run?

Mr. Norris: I am aware of the problem to which my hon. Friend refers. He has been assiduous in bringing it to my attention. As he rightly says, when properly installed, bus priority measures are at the heart of a more effective public transport system. However, it is essential for the local authorities, together with, in this case, the Traffic Director for London, to ensure that a proper balance is maintained between the interests of all parties, including the interests of frontagers, of shopkeepers, of those who want to walk along adjacent pavements and of the public who travel by bus.

Mr. Spearing: Does the Minister agree that there is considerable spare capacity on London's rail network inside the Greater London council area at weekends? Would it not be sensible to provide an even more economical overall ticket for adults and children on Saturdays and Sundays, thus making it possible for families who own motor cars to travel economically by public transport, which is not possible at the moment, and so to fulfil the Government's objective of reducing the amount of road traffic?

Mr. Norris: I look forward to the train operating companies recognising, when they are in the private sector, that one of the most important ways in which they will improve their profitability is to expand the number of people who use their services off peak—precisely at

weekends, when they have all the infrastructure in place and want to do everything that they can to encourage more people on to their services. As for ticketing, the hon. Gentleman knows the present system very well. The off-peak travelcard arrangement is extremely useful around London and, if one is making more than a couple of journeys, particularly in the central area, already represents extraordinarily good value for money.

Mr. John Marshall: Will my hon. Friend join me in welcoming the investment of £1 billion in the Northern line and £25 million in the Morden and Golders Green depots by GEC?

Mr. Norris: I will indeed. The bringing forward of the Northern line trains by using the private finance initiative is a major step forward for London Transport. It gives us the opportunity to give the travelling public in London who use that line reliable and modern trains many years earlier than would have been possible if the private finance initiative had not been encouraged and brought forward by my right hon. Friend the Secretary of State.

Mr. Tony Banks: Is crossrail going to go ahead?

Mr. Norris: I congratulate the hon. Gentleman on a particularly attractive outfit today. Quite what the black is intended to convey I shall leave to others' imaginations. The Government remain committed to the provision of effective infrastructure for London and recognise the value of the crossrail project.

A27

Mr. Rathbone: To ask the Secretary of State for Transport when he expects to publish detailed plans for major improvements to the A27 between Lewes and Polegate and around Polegate. [656]

Mr. Watts: The statutory procedures for the Polegate bypass scheme have been completed. We are looking very carefully at how to take those two schemes forward.

Mr. Rathbone: I welcome my hon. Friend's answer, but can 1 impress on him the need for a proper dual carriageway along that stretch of the A27 to cope with the traffic requirements not only of today but of tomorrow? For that road, tomorrow is 10 years or so hence.

Mr. Watts: My hon. Friend is assiduous in pressing the claims of his constituents for better road transport. I shall take full account of the points that he has made.

Ministerial Transport, M6

Mr. Fabricant: To ask the Secretary of State for Transport when he last drove down the M6 past Birmingham in the rush hour in his official capacity; and if he will make a statement. [657]

Sir George Young: I travelled on the M6 near Birmingham on 13 October to attend the bus and coach show.

Mr. Fabricant: I am relieved to hear that and I hope that my right hon. Friend enjoyed the show, but was he caught in a traffic jam? If he was not, it was probably a rare occasion. Is he aware that people constantly come off the M6 at Stafford and drive through my constituency to get down to Coleshill? Is he also aware that the state of


traffic on the M6 is causing great deprivation to industry not only in the midlands but in the north-west? When will we get the Birmingham northern relief road and when will the widening of the M6 be completed?

Sir George Young: My hon. Friend will be interested to learn that I was not inconvenienced by any traffic on my journey to Birmingham, although I do not deny that there is congestion on the M6. As for the Birmingham northern relief road, the inquiry has just been completed, and it was quite long. The moment that we get the inspector's report, we shall process it as quickly as we can. It will be a joint decision for the Secretary of State for the Environment and myself. I cannot speculate at this stage on timing, but we shall try to decide as soon as we can.

Mr. Mike O'Brien: Does the Secretary of State know that the promoters of the Birmingham northern relief road conceded at the public inquiry that building the road would not relieve congestion on the M6 at rush hours? Is it not the case that the only way to do that is through a properly integrated public transport system that gets people in the west midlands where they want to go at rush hours? The Government do not seem to be behind the sort of policy that would deal with the problems on the M6.

Sir George Young: On the first point, the hon. Gentleman tempts me to anticipate the Government's response to the inspector's inquiry. I know that he would not want me to do that.
On the second point, it is not the case that we have neglected public transport in and around Birmingham. There were questions earlier about the west coast main line. I was in the west midlands relatively recently, turning the sod for the Midland Metro scheme. There is substantial investment in public transport in and around Birmingham, so people are not wholly dependent on the M6 to get around.

Airline Subsidies

Mr. Mans: To ask the Secretary of State for Transport what steps he is taking to ensure that further state subsidies are not provided by EU Governments to their state airlines [659]

Sir George Young: The UK opposes subsidies which distort competition in aviation. We shall continue to press the European Commission to take tough action in line with the treaty rules on state aid.

Mr. Mans: Does my right hon. Friend agree that it makes no economic sense for subsidies provided by the Spanish and French Governments to be used simply to cut fares on specific routes to gain turnover rather than to turn subsidised monopolies into profit-making organisations, which is the intention with Air France? Does he agree that that has to stop, in the interests of all air travellers across Europe and particularly of companies, such as British Airways, which are already in the private sector and operating profitably?

Sir George Young: My hon. Friend is right. State aid shores up the inefficient airlines. The Government have made their position clear: we oppose any further aid to Iberia. State aid to Air France amounting to £2.4 billion seriously distorts competition. The right answer for those countries is to do what we have done and privatise their airlines.

Oral Answers to Questions — HOUSE OF COMMONS

Constituents' Facilities

Mr. Skinner: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission what progress the Commission has made in providing funding for better facilities for visiting constituents to the House. [681]

Mr. A. J. Beith (on behalf of the House of Commons Commission): On 12 July 1994, the House approved the first report of Session 1992–93 from the Catering Committee, which recommended that the area currently occupied by the Westminster Hall cafeteria should be converted into a visitors' centre which would provide light refreshments for the public, but that that should take place only when a suitable alternative had been found for the present lunchtime users. The Catering Committee is advised that, at present, there are not sufficient outlets for staff to accommodate the large numbers of users of the Westminster Hall cafeteria who would be displaced. It is therefore unlikely that the recommendations can be implemented until the opening of the new cafeteria in phase 2 of the parliamentary building plan. It remains the Commission's intention to proceed to implementation as soon as circumstances permit.

Mr. Skinner: Obviously, that reply from the Liberal Democrat Member of Parliament who represents the Commission on this occasion is not good enough. Is he aware that when disabled people come to Parliament—there has been an increasing number of them lately, protesting about the Government's Disability Discrimination Bill and trying to get their own Bill through—there are no proper toilet facilities, with the result that private facilities costing several thousand pounds are engaged every time that there is a disabled lobby? The disabled have to use portable toilets, which cost money, in Star Chamber Court. Why is it not possible for the Commission and the Government to provide the money to ensure that when disabled people come to Parliament to protest and to lobby their Members of Parliament, proper toilet facilities are installed somewhere or other in the building? Surely, with all the money that they spend on the portable facilities, they ought to be doing something of a permanent nature.

Mr. Beith: The hon. Member raises a perfectly good point, about which there is a question further down the Order Paper. The Commission made it clear that it is ready to implement, and find the money to implement, whatever recommendations the domestic Committees bring forward to help disabled people.

Mr. Viggers: Does the right hon. Gentleman agree that there is no greater honour for a Member of Parliament than to show constituents around the House of Commons and that, generally, we have few complaints about the facilities available and nothing but praise for your staff, Madam Speaker, and the other staff of the House of Commons who make those visits possible? Does he agree that the real problem arises from mass lobbies, where the unreasonable expectation is given that they provide a good forum for dialogue between Members of Parliament and the public, and that that worthwhile dialogue is best achieved in the constituency or perhaps by hiring a hall outside the Palace?

Mr. Beith: I agree that it is a great honour to show constituents around the House and that they rarely have any complaint except that they often express a wish to have somewhere to go for a cup tea where they do not have to be accompanied by the Member who is showing them around.
On the issue of mass lobbies, there are obviously physical limitations on the ability of the building to allow a large number of people to see their Members of Parliament during an afternoon. Organisers of lobbies must recognise that, although they may wish to have the impact of bringing a large number of people here.

Staff Remuneration

Mr. Janner: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission if he will make a statement on the remuneration of House of Commons staff. [673]

Mr. Beith: The House of Commons Administration Act 1978 requires the House of Commons Commission to ensure that complementing, grading and pay of staff in House Departments are kept broadly in line with those in the home civil service. For most staff, rates of pay are the same as those in equivalent grades in the civil service. Where variations have been introduced, they have been achieved through negotiation with the appropriate recognised trade unions.

Mr. Janner: Does the right hon. Gentleman agree that House of Commons catering staff do a superb job and should be paid on the same basis, receive equal treatment and be awarded the same pay increases as people in other Departments, and that those increases should have the same benefits? If so, why were average increases for non-catering staff 2.5 per cent. while those for catering staff were equivalent to only 2.05 per cent., which is rotten? Even if the difference were made up with a lump sum, it would not include pension allowances.

Mr. Beith: Refreshment Department pay rates are linked to those negotiated between the Treasury and the National Union of Civil and Public Servants. They involve a number of benefits that do not apply in other Departments of the House, and there is a separate pay structure. However, I shall arrange for the hon. and learned Gentleman's specific point to be looked at.

Mr. Fabricant: Is it true that a deputy chef in the House of Commons earns more than a Member of Parliament? As a Member of Parliament, I declare an interest.

Mr. Beith: I suggest that the hon. Gentleman looks at the Commission's annual report, where he will find just how many people are paid more than Members of Parliament.

Disabled People

Mr. Cox: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission what further funding he will make available to improve facilities for disabled people who attend meetings at the Houses of Parliament; and if he will make a statement. [674]

Mr. Beith: The hon. Gentleman will recall the statement made by the Chairman of the Accommodation and Works Committee on 19 October this year, outlining

improvements made during the summer recess to try to make this place more accessible to the disabled. By the end of this financial year, we expect to have spent some £688,000. Further expenditure will be authorised as necessary following any advice that we receive from the Accommodation and Works Committee.

Mr. Cox: I note that reply, but the right hon. Gentleman must be aware that the House has an obligation to help disabled people, many of whom are confined to wheelchairs, when they come here to see us. Is he aware that, when a lobby took place in Westminster Hall recently on a very unpleasant day, no facilities were available for those people to have a hot drink, or even a cold drink? We now have a sales kiosk in Westminster Hall, but when will priority be given to disabled people? They have a right to come and see us and we have a duty to make facilities available to them when they do so.

Mr. Beith: The Commission is sympathetic to the sort of argument that the hon. Gentleman makes and has sought at every stage to implement practical suggestions on how facilities for the disabled could be improved, including providing additional toilets, adapting lifts, and making a new entrance via Black Rod's Garden, which provides better access for disabled people to certain parts of the building. I shall ask the Commission to look at the point that the hon. Gentleman raises.

Sir Anthony Grant: To help the funding of facilities in the House, would it not be a good idea to place at each exit from the House a box, so that, quite voluntarily, visitors in their increasing numbers could contribute to improving those facilities? I am sure that the hordes of foreign visitors who increasingly come here would be only too delighted to help in that voluntary fashion.

Mr. Beith: The Commission has never discussed such a proposal but, if I may venture an opinion, I think that those who come here feel that they pay for this place out of their taxes and are entitled to have a look round.

Members' Facilities (Chamber)

Mr. Tony Banks: To ask the right hon. Member for Berwick-upon-Tweed, representing the House of Commons Commission what proposals the Commission has for expenditure on additional facilities for Members in the Chamber. [678]

Mr. Beith: None, but I am sure that the appropriate domestic Committee would give careful consideration to any proposal that the hon. Gentleman may put forward.

Mr. Banks: It is not a question of proposals that I may put forward. We all know that the facilities provided to Members are appalling. This place is a cross between a gentleman's club and a public school. We have nowhere to sit and write while we listen to these banal questions and pathetic answers. Is it not about time that we pulled this whole wretched place down and started again?

Mr. Beith: Neither I nor the Commission are in favour of pulling down this fine and notable building. Quite a lot of improvements have been secured in and around it over the years. The Commission's view is that its job is not to invent new facilities for Members but to respond to


reasonable proposals, which have been carefully examined and, if they are major proposals, have also gained the approval of the House.

Mr. Carrington: Does the right hon. Gentleman occasionally need to phone outside the United Kingdom, on parliamentary business, through the House of Commons telephone system? If so, he will have discovered that it must be done through the House of Commons operator. Should it not be perfectly possible, given the computerised telephone exchange that the House now has, for Members of Parliament to dial abroad directly and for those calls to be billed to them from the PABX system without the direct intervention of the operator?

Mr. Beith: I imagine that it is, but I will inquire and write to the hon. Gentleman.

Oral Answers to Questions — LORD PRESIDENT OF THE COUNCIL

Parliamentary Procedures

Mr. William O'Brien: To ask the Lord President of the Council what plans he has further to reform the procedures of the House; and if he will make a statement. [683]

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): The House agreed to wide-ranging reforms in its procedures earlier this month. Proposals for further reforms affecting Scottish and Welsh parliamentary business will be announced shortly. If the hon. Gentleman has a specific proposal in mind, he might like to draw it to the attention of the Procedure Committee.

Mr. O'Brien: Will the Lord President of the Council consider allowing Members to debate significant and topical current issues, such as the "Panorama" interview with the Princess of Wales? Could we have the same facilities in the House as the Minister of State for the Armed Forces had on television debating that issue? If such facilities cannot be made available, what action will be taken against the Minister?

Mr. Newton: That question appears to be an attempt to rerun a number of exchanges that took place with me at business questions and, perhaps more importantly, with my right hon. Friend the Prime Minister at Prime Minister's questions last Thursday. As I said then, I have nothing to add to what has been said.

Mr. Flynn: To ask the Lord President of the Council what new proposals he has to improve the efficiency of parliamentary procedures. [684]

Mr. Newton: In addition to the procedural reforms to which I referred in my previous answer, we believe that the legislative work of Parliament can be improved by the publication of draft Bills when timing and other considerations make it practicable and appropriate. That practice has already been adopted for a number of Bills in the past two years. In the present Session, we intend to publish draft Bills on adoption, building societies and merchant shipping.

Mr. Flynn: The long-established procedures of the House make it clear that we are unable to discuss the conduct of the sovereign, the heir to the throne or the members of the royal family, except under a substantive motion. Will the Leader of the House make time available at least once a year so that we can discuss the future of the royal family and the funding of the monarchy?

Mr. Newton: It will not surprise you to learn, Madam Speaker, that I have no plans to proceed in that manner.

Mr. Harry Greenway: Will my right hon. Friend confirm his recent answer to me in a written question that he is in favour of retaining the use of opera hats for points of order during Divisions? Will he take steps to ensure that there is more than one hat in the Chamber—perhaps the Clerk to the House could keep a hat for the convenience of Members?

Mr. Newton: I think that I made some reference to that matter in an earlier exchange with my hon. Friend. If I remember rightly, I suggested that that was a matter that the Procedure Committee, the distinguished Chairman of which I am glad to see in his place, might care to consider.

Mr. Bennett: Will the Leader of the House accept that, while we welcome the move to publish Bills in advance, it would be better if the Government were agreeable to having Select Committee hearings on many Bills? Does he realise that the Procedure Committee originally recommended that that should become commonplace on most Bills? Two experiments were carried out and the process then fell into disuse. Will the Government reinstitute the process and ensure that we have Select Committee hearings on most Bills to improve scrutiny in the House?

Mr. Newton: Just as I said in respect of the draft Bills in my speech last Wednesday, all those matters need to be considered carefully in relation to particular cases. A number of other factors have to be taken into account, including the need to pass legislation speedily, the degree of controversy and therefore the likelihood of whether such proceedings would be helpful. I note the representations that the hon. Gentleman has made.

Mrs. Ann Taylor: Given the success of the Jopling experiment and the changes that have been incorporated into Standing Orders, the comments that the Leader of the House made at the end of the debate on the Queen's Speech and the fact that this Question Time is always very brief and there are many substantive arguments, such as that just made by my hon. Friend the Member for Denton and Reddish (Mr. Bennett), would it not be a good idea for us to hold a proper, well-informed debate on many of the suggestions that have been made by the Procedure Committee of ways in which we may make longer-term, more fundamental changes to our procedures so as to make Parliament work more effectively and efficiently?

Mr. Newton: As always, I am grateful to the hon. Lady for the constructive approach that she has brought to those issues, which has helped the whole House to make progress. I will therefore examine her suggestion carefully.
I should perhaps draw attention to the fact that the House has had a fairly substantial opportunity to debate procedural matters very recently, in the debate on the Jopling proposals, but I would not rule out the hon. Lady's

suggestion. Specifically, there would be some merit in bringing the attention of a wider audience to the progress that we have made, not least in respect of the publication of draft legislation.

National Blood Service

The Secretary of State for Health (Mr. Stephen Dorrell): With permission, Madam Speaker, I wish to make a statement about the organisation of the national blood service in England.
I have today accepted revised proposals from the National Blood Authority for the future of the blood service. The details of those changes are set out in a policy document, copies of which are available in the Vote Office.
The blood service is an essential part of the NHS. Modern medicine relies on the ready availability of blood and blood products, and the national blood service has an enviable reputation for providing a service that is safe, reliable and efficient. The changes that I am announcing today build on that reputation.
In this country, the blood service is based on a gift. Blood is given by voluntary donors, who neither seek nor receive payment. The blood service accepts two obligations in return. First, it accepts an obligation to provide donors with a service that is safe and convenient. Secondly, it accepts an obligation to ensure that their gift is used as effectively as possible.
The changes that I am announcing today will mean an improved service to donors. New information technology will mean that donor sessions are better planned; higher standards will be set for the premises that are used; and greater use of mobile units will allow for more local donor sessions. Those changes will be underwritten by the publication today of a blood donors charter, which will set out the standards that donors are entitled to expect, as well as a new complaints procedure to operate if those standards are not met.
Today's changes will also mean a better service to hospitals. Every hospital will continue to have its own blood bank. The blood service will continue to supply those hospital banks from its own network of 15 NBS blood banks. In addition, it will open two more facilities, in south Lincolnshire and central London. The addition of those two new facilities will, for the first time, allow the blood service to give every NHS hospital the assurance that emergency hospital supplies can be delivered within a maximum of two hours.
Furthermore, the blood service is increasing the resources that it commits to research and development. It has for the first time appointed a national co-ordinator of research and development, and it is developing centres of research excellence at Cambridge and Bristol. An extra £1 million will be devoted to ensuring that the latest developments in transfusion medicine are made available to hospital consultants.
It is important that every consultant whose practice relies on the effectiveness of the national blood service should be confident that it is able to meet his or her requirements. I have therefore decided to establish a national user group to monitor the service provided to hospitals by the blood service. It will report to me annually, and its reports will be published. I am delighted to inform the House that Professor Edward Gordon-Smith, professor of haematology at St. George's hospital, London, has agreed to be its first chairman.
As the House knows, I attach great importance to minimising unnecessary administrative and support costs in the NHS. When the National Blood Authority assumed responsibility in April 1994, the structure of the blood service reflected its history as the responsibility of 14 regional health authorities. There were 13 administrative centres, with computer systems that were not compatible with one another and considerable duplication of both administrative and specialist clinical support services. Those arrangements made it difficult to move blood stocks from one region of the country to another when the need arose.
The changes that I am announcing today will simplify those structures. A new computer system will allow blood stocks to be managed on a national basis, specialist clinical support services will be reorganised to make more effective use of the skills available and the administrative functions now carried out in 13 administrative centres will be concentrated at three centres in Leeds, Bristol and London. Those changes will release £7.5 million for patient care elsewhere in the NHS.
Furthermore, the organisation of processing and testing of blood supplies on a regional basis has led to a significant overcapacity and waste of resources. I have therefore accepted the NBA's proposals to concentrate processing and testing work in fewer centres. That work will cease in Lancaster by March 1996, in Oxford, Cambridge and Liverpool by December 1997, and in Plymouth by March 1998. Concentration of the work at the remaining centres will leave the blood service with sufficient capacity to meet projected demand, and will release a further £2.5 million for patient care elsewhere in the NHS.
The decisions that I have announced will be phased over the next three to four years, and will involve reductions in staffing levels over that period amounting to about 300 posts. That represents a 7 per cent. reduction over the period, and the management of the blood service will do everything possible to avoid compulsory redundancies.
Today's announcement brings to an end a period of substantial uncertainty in the national blood service. It is a reflection of the dedication and professionalism of the staff that they have maintained high standards of service throughout that period. These changes will bring significant service improvements to both donors and hospitals, while at the same time releasing a total of £10 million for improved patient care elsewhere in the NHS. I commend them to the House.

Ms Harriet Harman: We welcome the Secretary of State's recognition that the blood service must be based on a gift. I hope that he will tell us that he will ensure that we have no more commercial gimmicks from the National Blood Authority. We welcome the introduction of a blood donors charter, and hope that it will achieve better enforcement than other aspects of the patients charter; I also welcome the Secretary of State's announcement of a new national user group.
Does the right hon. Gentleman, however, recognise the dismay that will be caused by his announcement that he will press ahead with the plan to take blood processing and testing away from Liverpool, Cambridge, Oxford, Plymouth and Lancaster? Does he not realise that those who work in the blood transfusion service, those who donate their blood and the doctors who use that donated


blood have all made clear their opposition to the plan? They believe, as we do, that it will make the service more expensive, and less able to respond quickly to the need for blood.
Does the right hon. Gentleman accept that, although he claims that the plan to withdraw testing and processing from those centres will cost the NBA less, it will be a false economy? It will cost the NHS as a whole more. It will cost more in increased travel costs, and in wastage: blood that had been taken and stored in case it was needed will be thrown away. Local centres have always responded quickly to specific local demand. The plans will not produce the savings that the Secretary of State has promised.
Does the right hon. Gentleman accept that the plans threaten the very viability of the work that will remain at the five centres? Once the testing and processing of donors' blood has been removed, and only the testing of patients' blood remains, unit costs in the five centres will rise, and the Secretary of State will come to the House to tell us that those centres are too expensive and must close altogether. Does he admit that that will be the next step? Why has he not learnt from his last effort at trying to save money on the blood service? The decision to buy cheaper blood bags from Australia led to the infection of patients and to the withdrawal of the bags. That decision lowered safety standards and cost more in the long term.
Does the Secretary of State accept that he has failed to convince doctors that his proposals will improve the quality or availability of the blood that is so vital to the national health service? Hundreds of doctors, as well as donors and those working in the service, have registered their opposition to the plans which the Secretary of State has said will go ahead. Clinicians in Liverpool and Oxford, in particular, have said that, far from improving the service, the plans will put lives at risk.
Why has the Secretary of State brushed those concerns aside? Does he not recognise that those who work in the blood service have helped to transform the way in which blood is collected, processed and tested? Therefore, their opposition to his plans is based not on resistance to change, but on the belief that the plans are totally wrong.
Does the Secretary of State realise that his handling of the plans has had a demoralising effect on the blood service, and that staff have drifted away? We have the worst of all possible worlds: a long period of consultation and uncertainty, followed by a decision that shows that the Secretary of State has not listened to those whom he consulted. With the proposed new computer system to which the Secretary of State referred at least 18 months from completion, it will not be possible to move the work to those centres that are not staffed adequately.
Is it not ironic that today's announcement coincides with yet another blood shortage? Will the Secretary of State confirm that blood is being brought from Scotland in order to deal with the shortage in London? As the Cambridge centre did not appear in the original proposals about which the Secretary of State consulted, what plans does he have to consult those involved with that centre, who have learnt today that it is to lose blood testing and processing work?
If the Government trample the views of those who work in and use the blood service, they will never get it right. If the Government look only at the balance sheet and not

at the patient, they will never get it right. Is that not yet another reason why the British people do not trust the Government with their national health service?

Mr. Dorrell: It is incredible that the hon. Member for Peckham (Ms Harman), who usually chides the Government for not consulting enough, should now chide us for consulting for too long and then—to use her words—for "brushing the concerns aside". That is simply not true.
Clinicians from Liverpool, Oxford and elsewhere have expressed their concerns about whether the blood service would deliver the enhanced service that was described in the document and acknowledged as the ambition of the blood service. I listened to their views, and I responded by establishing the national user group—which the hon. Lady welcomed.
Clinicians working in the health service who rely upon the national blood service are concerned that that service should meet the standards that it set out in its document. I am grateful to the hon. Lady for recognising the importance of the national user group and of the donors charter, which sets out the standards that donors have a right to expect from the national blood service.
The hon. Lady took the side of those who argue that one cannot remove processing and testing work from blood centres without undermining their viability. Perhaps she has seen a copy of last week's British Medical Journal, in which Sally Davies, a widely respected consultant haematologist at the Central Middlesex hospital, argues the opposite case. She has experience gained from her own practice of doing precisely that which the hon. Lady says is impossible.
In the article, Ms Davies writes:
Consultants at some teaching hospitals have suggested … that removing the processing and testing of blood from their sites will adversely affect their clinical services. The experience of teaching hospitals and specialist centres in London shows that this need not be the case.
They are not my words, but those of a consultant haematologist who practises in the national health service.
The hon. Lady said that she was anxious to remove unnecessary costs. from the national health service. Why does she want us to protect a system which, as the document makes clear, provides overcapacity in processing and testing around the national blood service so that testing facilities are 48 per cent. overcapacity and grouping facilities are 59 per cent. overcapacity? Surely there are few better opportunities to use taxpayers' pounds to greater effect than to address overcapacity in a support service of the national blood service. That is why we are removing unnecessary overcapacity. It will not damage or undermine the viability and quality of the service that the national blood service provides.
It is true that, as a result of the consultation, we have changed the proposals for Cambridge to concentrate research functions—which we plan to expand—on the Cambridge facilities, and to ensure that the facilities at Brentwood are used to maintain the processing and testing capacity that we need. I have no doubt whatever that those decisions represent the use of the facilities at Brentwood, and the development of an opportunity for enhanced research and development at Cambridge. I hope that the hon. Member for Cambridge (Mrs. Campbell) will welcome that.

Dame Elaine Kellett-Bowman: Will my right hon. Friend accept my considerable relief and that


of the donors and the teams which serve them in Lancaster that they will receive an improved service? The rumour was that they would have to go to Manchester to donate. I never believed that was true, and I am delighted that that uncertainty has been cleared up. Will my right hon. Friend please thank the chairman of the National Blood Authority for the trouble he took to consult people? May I also cotton on to another point that he raised—improved facilities?

Madam Speaker: Order. The hon. Lady is very keen for other Members to ask questions. Perhaps I could now have one from her.

Dame Elaine Kellett-Bowman: If my right hon. Friend is aiming to improve premises, does he not agree that the facilities in Lancaster are not ideal, and that it would be infinitely to the advantage of donors and the teams which serve them if, in the fulness of time, he could provide a new purpose-built centre as part of phase 3 of the Lancaster royal infirmary? Then we really would be quids in, and it would be more convenient for everyone.

Mr. Dorrell: I shall certainly look at my hon. Friend's proposals for a specific improvement in facilities, but I can assure her that one of the benefits that will flow from the improved focus on the donors' perspective is that, around Lancaster, as in the rest of the country, we shall ensure that there are improvements in those facilities that do not match the standards that we expect when we encourage people to give blood.
My hon. Friend is absolutely right to stress that the statement represents an improvement and not a deterioration in the quality of the service that is provided to the donors on whom the national blood service relies, and an enhancement of the service to NHS hospitals. There will not be a diminution of blood donorship sessions, but an extension of local ready access to blood donorship. Every, existing blood service blood bank will be maintained, and the provision will be extended to two more.
There will also be the development of a higher profile for the research and development function of the national blood service. Finally, I agree with my hon. Friend that Sir Colin Walker has played an important and distinguished part in delivering those important changes.

Mr. Simon Hughes: As the proposals at the end of the consultation were the same as those at the beginning, will the Secretary of State undertake to release all the evidence, so that the public can see whether the decision reflects the weight of evidence? Can he assure the House that no hospital will have its emergency services delayed longer than now? I heard the assurance that it is two hours per hospital. Will any hospitals be worse off?
Does the charter that the right hon. Gentleman has announced mean that there will be no huge profiteering by selling on blood supplies, as revealed earlier in the year, or is it all about Tony Hancock proposals, such as making sure people can have sugar in their tea?

Mr. Dorrell: First, the hon. Gentleman said that the proposals are the same as when they originally went to consultation. That is not true. I have referred already to changes in Cambridge, and some important new safeguards which were introduced as a result of the consultations. The hon. Gentleman asked for evidence. The evidence submitted to such a consultation is the property of the people who submit it; if they wish to publish it, that is entirely their right. I do not intend to publish it.
I give the hon. Gentleman the absolute assurance that no hospital will experience a diminution in the time taken to replenish its blood bank. I also give him the absolute assurance that there will be no change in the directive to the national blood service, which is that it does not make a profit out of the act of donation of human blood.

Mr. Douglas Hurd: I am grateful to my right hon. Friend for the way in which he has handled this matter. Will he allay anxiety by assuring us that the Oxford hospitals—and, indeed, other hospitals—will continue to have the full and prompt range of services that they enjoy now? Will he further assure us that the Oxford blood centre and the other centres that will lose processing and testing will remain open and still have a worthwhile job to do?

Mr. Dorrell: I can certainly give my right hon. Friend both those assurances. Every hospital will continue to receive the same timely service that it receives now. The only change will be for those that experience improvements as a result of the development of the chain of national blood service blood banks announced today. The quality of service available to every national health service patient will continue to be built on the quality of reputation that the national blood service has built for itself. My right hon. Friend can have the absolute assurance that all 13 blood centres will continue to exist—what is changing is the processing and testing behind those blood centres.

Mrs. Anne Campbell: The announcement today will be met with utter dismay in my constituency, especially as the consultation has been carried out in what I believe to have been a very unfair way. Cambridge has had no opportunity to evaluate the effects of the closure of the Cambridge centre on services in Cambridge.
Does the right hon. Gentleman appreciate the profound effect that that will have both on the liver transplant programme at Addenbrooke's hospital, and on the heart and heart-lung programmes at Papworth hospital? They are world-renowned centres of excellence in their fields, and both place a high demand on the transfusion service for blood and blood component supports. Does not the right hon. Gentleman feel that simply leaving a fridge of blood at the Cambridge site is ludicrous in the extreme?

Mr. Dorrell: I join the hon. Lady in recognising and applauding the excellence of the service at both Addenbrooke's and Papworth. I can give the consultants and, more importantly, the patients at those hospitals the assurance that the national blood service will continue to deliver all the things that they have grown used to, with the important addition of an improved research and development function—which will be located in the hon. Lady's constituency and at Bristol. I had hoped that the hon. Lady might welcome that.

Mr. Roger Sims: Will my right hon. Friend confirm that the demand for blood has increased steadily in recent years and continues to do so, and that it is therefore essential that there is an adequate number of donors? Will he assure the House that the reorganisation that he has announced today will not diminish the opportunities available to those who wish to give blood? To emphasise the importance of the service, would he care to set an example by giving a little ministerial blood?

Mr. Dorrell: I gave some ministerial blood last week, so I would not be welcome again this week.
My hon. Friend rightly placed importance on the act of donorship, on which the national blood service depends. That is why I placed stress on ensuring that we enhance the facilities available for blood donorship, that the act of donorship is properly respected, and that the arrangements made for donors are as convenient as possible. That is the purpose of the blood donors charter. I welcome the fact that that, at least, has been welcomed by the Opposition.

Mr. Peter L. Pike: The right hon. Gentleman will know that the Lancaster centre has been concerned throughout that the specialist services it provides could be put in jeopardy by his announcement this afternoon. Is that the position, or have there been changes to take account of its fears in that respect?

Mr. Dorrell: The changes that will be implemented at Lancaster are essentially the changes that were originally proposed: to maintain the blood centre, to stop processing and testing, and to ensure that the support services based at Lancaster take part in the national reorganisation that I have talked about. The effect will be to ensure that the specialist support services available from the national blood service respond to the demands made on them by NHS hospitals and are organised in such a way as to deliver the service as efficiently as possible.

Mr. Eric Pickles: I thank my right hon. Friend for listening to the staff and the many supporters of the blood processing unit at Brentwood. Does he agree that the one area of the country that will have a growth in population is East Anglia, and that the decision to retain the Brentwood processing plant will guarantee blood processing within the East Anglia area for all future needs?
On a general point, does my right hon. Friend agree that, before the reorganisation of the blood service, if there was -a shortage of blood in one part of the country and a glut in another, it was not possible to send blood where it was needed, and that sending blood from Scotland to London is therefore something that we should applaud rather than condemn?

Mr. Dorrell: My hon. Friend is quite right to stress the importance of regarding the blood that is contributed to the national blood service as a national resource, which we should be able to use as efficiently as possibly to meet national needs. That is one of the major purposes of the changes that I have announced.
As for Brentwood, my hon. Friend is right to stress the important role that it will now play in meeting the rising demand for blood in central London and in East Anglia. It is also important to underline the fact that the revised proposals for Brentwood allow the development of the

research and development facility in Cambridge, whose function is an important part of the development of modern evidence-based medicine. That is an important part of the total package that I have announced.

Mr. Ken Eastham: May I ask the Minister for some details about the chairman? Will the job be voluntary, fulltime or parttime? Will the user group be a quango run from Conservative central office, and what salary will the chairman receive, if any?

Mr. Dorrell: There will be no salary attached to the appointment; it will be done as part of Professor Gordon-Smith's commitment to the NHS, to ensure that the NHS delivers a continuing improvement in the service to its patients. Several consultants expressed concern during the consultation about the standards of delivery of the national blood service. The national user group responds to that concern by inviting representatives of the users of the national blood service to form a group to monitor the delivery of standards, and that group's reports will be published.

Sir Malcolm Thornton: I have listened very carefully to my right hon. Friend's statement. While I welcome the assurances that he has given about the service that will be provided, may I draw his attention to the regionally, nationally and internationally respected service provided by consultant haematologists in Liverpool? Has he taken into account in making his decision the fact that this could well jeopardise the wider research basis of developments in Merseyside, and will he consider that further if necessary?

Mr. Dorrell: I have certainly taken account of that view, of which I am well aware. As I said, there was an article in last Friday's British Medical Journal which demonstrated that, in the view of a senior and respected consultant haematologist, that argument does not hold water, and that it is possible to maintain high-quality clinical services, including research, without having a processing and testing base in the relevant blood centre. It is precisely in order to ensure that any concerns about the standards of service that are delivered are met that I have established the national user group to which I have referred.
I have also asked the medical director of the National Blood Authority to consult directly representatives of senior clinical opinion in Merseyside and in Oxford. She reported to me that, as a result of those consultations, she believes that all the clinical questions raised by that consultation were resolved. Of course, that is without prejudice to their right to maintain their opinions, but the clinical questions raised during that consultation have been resolved.

Mr. Dennis Skinner: Does the Minister agree that his statement probably demonstrates more effectively than many just what makes this Government tick? They are prepared to play with the lives of millions of people throughout Britain by changing the whole system of dealing with blood in other parts of the country when advances in medical science mean that we need more blood. Why should anybody trust this Government to transfer blood from one part of the country to another, when they cannot even transfer water in the middle of November from one part of the country to another? As for this charter and this user group, God only knows what Tony Hancock would have done with that.

Mr. Dorrell: The hon. Gentleman obviously has to sort out his difficulties with his hon. Friend the Member for Peckham (Ms Harman) about the user group and the donors charter. But I did agree with one thing that he said—the changes that I have announced today show what makes this Government tick. To deliver high-quality service to donors and hospitals without waste and as efficiently as possible is what makes this Government tick, and I am very proud of it.

Mr. Barry Porter: There was obviously great consternation on Merseyside about the proposals and, to begin with, some serious objections were raised by some clinical people. I was grateful for the very detailed and, indeed, interminable negotiations. As I understood it, we were given an assurance that, unless professional opinion was in favour of the proposals, they would not go forward. Has that support been received?

Mr. Dorrell: That is precisely why I asked the medical director of the National Blood Authority to engage in face-to-face discussions with representatives of clinical opinion on Merseyside. As a result, people maintained their points of view, but no clinical questions raised were left unresolved. In such circumstances, I believe that, if there is the opportunity to improve services to both donors and patients, and at the same time release £10 million for services available elsewhere in the health service, it is my task as Secretary of State to take that opportunity.

Ms Angela Eagle: But having a discussion with the director of medical services, who then takes a report to John Adey, the head of the NBA, does not signify the consent of clinical experts on Merseyside. I can tell the Secretary of State that there is no consent among clinical experts on Merseyside for this change. When my constituents in the Wirral and the population of the rest of Merseyside consider the results of this so-called consultation, they will realise that all that the right hon. Gentleman has done is go ahead with exactly what was proposed at the beginning, except for switching one of the most badly affected centres from Brentwood and Ongar to Cambridge—

Madam Speaker: Order. I have not yet heard a question from the hon. Lady. This is Question Time, so I must have a question to which the Minister can respond.

Ms Eagle: I began by asking the Minister whether he agreed that sending the medical director along to talk to clinical experts—this is a very important point in Merseyside—signalled that those experts agreed with the proposals. I can tell him that those experts do not agree.

Mr. Dorrell: What the medical director found when she talked to representatives of medical opinion on Merseyside, around Oxford, and, indeed, nationally—this is a national service—was that a number of clinicians had concerns about whether the blood service would be able to deliver the standards of service to which it was committing itself. It is because of that concern that I am setting up the national user group to monitor clinical standards, and to ensure that every NHS clinician who relies on the blood service has the assurance that it delivers the standards to which it commits itself. That is the assurance we can give. I believe that that resolves the clinical questions which arose during consultation.

Mr. Nigel Evans: People who live in rural areas such as Ribble Valley have to travel further to

give blood. Will my right hon. Friend give an assurance that the mobile units and the service they receive will not be reduced? A number of people in my constituency have blood belonging to rarer blood groups, and are therefore asked more often to give blood up at the Lancaster centre. Will my right hon. Friend give an assurance that they will be able to do so in future?

Mr. Dorrell: The answers to my hon. Friend's questions are yes, and yes. There will be no diminution of the local collection service. Indeed, in many parts of the country, it will be enhanced. All the existing blood centres will remain open, as both donor centres and blood banks.

Mr. Andrew Miller: Does the Secretary of State agree that, the smaller the number of processing centres, the greater the risk of cross-infection of blood products? Does he agree, therefore, with clinicians in Liverpool who believe that the closure of the service there has not taken into account all the issues that should be taken into account in the public interest?

Mr. Dorrell: If the hon. Gentleman's point had not been taken into account, I would agree that we had not taken account of everything that we should have taken account of. We have taken that point into account, and that is why, although the capacity is being reduced, we are continuing to plan for excess capacity—a safety margin—in every part of the country to accommodate precisely the uncertainty to which the hon. Gentleman refers. We are reducing overcapacity to release money to maintain patient care elsewhere in the NHS.
The hon. Gentleman asks whether it is true that we have taken account of the effect on the blood service of unforeseen circumstances in individual blood centres. The answer is yes.

Mr. David Congdon: I welcome my right hon. Friend's statement and his determination to achieve value for money in such an essential service, thus releasing £10 million for additional patient care. What will the benefits be of the two additional blood centres, one of which will be in London? Will he confirm that, despite the uncertainties that have been alleged by Opposition Members, the daily collection of blood is up by 6 per cent. on the 1993 figure?

Mr. Dorrell: It is true that the daily collection of blood has been meeting requirements, and has been on an upward trend. The two new national blood service blood banks will be established in south Lincolnshire and in central London, so that every NHS hospital has the assurance that its own blood bank can be replenished within two hours. That is a standard to which the national blood service should work. In parts of the country, the service occasionally falls below that standard. The investment of extra resources in the two new blood banks will provide an assurance to every NHS hospital in England.

Mr. Peter Kilfoyle: Many of us believed that the Secretary of State would come to the issue with an open mind, and are bitterly disappointed that he has failed to do so. Does he recall a meeting with an all-party delegation of Merseyside Members of Parliament last month, at which the director was present? Does he recall that what she averred about the clinicians' position


was flatly contradicted by Members of all parties? What has the Secretary of State done to satisfy himself—not the director, who had clearly made up her mind before she came to the meeting—about what the majority of clinicians believe should be done?

Mr. Dorrell: After that meeting, I asked the medical director to talk to all the leading clinicians on Merseyside and in Oxford to resolve the clinical questions that arose during the consultation.

Ms Eagle: They did not.

Mr. Dorrell: The hon. Lady says that they did not. The fact is that the medical director met senior clinicians on Merseyside and in Oxford. She addressed and resolved the clinical questions. Of course individual citizens are entitled to their views. My responsibility is to deliver national health service medical services to the highest standard possible and as efficiently as possible. That is the obligation which this statement discharges.

Mr. Michael Fabricant: As a regular donor of A Rh-positive blood, I welcome this statement, which is more than any Opposition Member has done. [Interruption.] Opposition Members do not seem to give blood or, if they do, no one has mentioned it. Is my right hon. Friend aware that many people feel that there have been difficulties when they move home in terms of records not being transferred from the old area into the new one—a problem that I have experienced? Will that problem be alleviated with a new national blood service?

Mr. Dorrell: Yes, my hon. Friend is absolutely right. The existing structure of the blood service introduces unnecessary and anomalous divisions between different parts of the country. The establishment of a national computer system will resolve that problem, and my hon. Friend's records will be able to move freely around the country.

Mr. Andrew Smith: This is a very sad day for Oxford and the other blood centres affected, and there has been a betrayal of the commitment and excellence of the staff in those centres. In addition, there has been a clear breach of the undertakings that were given, that the Government would proceed only with proposals which commanded clinical confidence. Does the Secretary of State accept that there are clinicians who remain opposed to the proposals? If things do not work out as the right hon. Gentleman expects, is he prepared to reconsider the matters before the functions are closed?

Mr. Dorrell: Better than that, Madam Speaker: I have set up a committee which is free to report if things do not work out as I have set out. If the user group reports that the service provided by the national blood service does not meet the needs of clinicians operating in the NHS, we will take the steps necessary to ensure that it does meet those standards. But since the management of the blood service believes that it can deliver an enhanced service for lower costs, I believe that the right thing for the Secretary of State for Health to do is to ensure that that higher quality of service is delivered, and to use the savings made to treat more patients in the NHS.

Points of Order

Mr. Max Madden: On a point of order, Madam Speaker. I wish to raise a point of order of which I gave prior notice to you, the Home Secretary, the Chairman of the Procedure Committee and the shadow Home Secretary.
On 21 November, the Home Secretary, referring to the Procedure Committee's recommendations relating to Standing Committees, said:
In its second report in the 1989–90 Session, the Committee said clearly that the procedure was appropriate for Bills that were not controversial in party political terms."—[Official Report, 21 November 1995; Vol. 267, c. 555.]
On checking the Procedure Committee's recommend-dations, I found that it said:
we recommend that it"—
the Government—
should, starting with the 1990–91 Session, make a serious effort to ensure that a reasonable proportion of the legislative programme (and in particular those Bills which are not controversial in party political terms) is referred to Special Standing Committees.

Madam Speaker: Order. I thank the hon. Gentleman for giving me notice of the point that he wished to raise today. The matter has been raised endlessly in numerous debates on the Queen's Speech. I am afraid that I cannot help him in continuing his discussions with the Home Secretary about the interpretation of the reports of the Procedure Committee on the subject of Special Standing Committees, as that does not constitute a point of order.
However, I want to be helpful. I direct the hon. Gentleman's attention to Standing Order No. 61, in which he will see that it is open to any Member of this House to move after Second Reading of a public Bill that that Bill be committed to a Special Standing Committee. The House can then decide forthwith whether or not to agree to such a motion. Therefore, the bottom line is that this House itself determines whether a Bill will go to a Special Standing Committee or not.

Mr. Terry Lewis: On a point of order, Madam Speaker. On 5 November, I tabled three parliamentary questions to the Secretary of State for Transport for answer under Standing Order No. 18(4), relating to priority written questions. In answer to the questions, the Roads Minister said that he would write to me. On 8 November, the Minister indicated in a three-line letter that the matter would be referred to the Highways Agency chief executive, Lawrie Haynes. Two days later, I received a letter from Mr. Haynes which answered one of my questions. However, two of my questions have still not been addressed.
I regard that as a total contempt of this House, and certainly a contempt of our Standing Orders. Further to the query about the roads programme, Madam Speaker, your position may have been compromised by Ministers, but I will not raise that matter in public until I have had an opportunity to speak to you. However, I would like the question of the contempt of this House by Ministers to be addressed.

Madam Speaker: Yes, indeed. If I understand correctly what the hon. Gentleman says, I have a great deal of sympathy with the point he makes. He is not


receiving the service to which he is entitled from Ministers. I remind him and Ministers that Ministers remain fully accountable for the work of their Departments, including that of executive agencies.
It is for the relevant Minister to decide whether to refer a question to the chief executive of an agency for a detailed answer, but it is also up to the Minister to see that any hon. Member receives a reply within reasonable time to questions that are put to him. I hope that those on the Government Front Bench are making a note of the comments that I have made, and will see that the hon. Gentleman and any other hon. Members who are not receiving the service to which they are entitled do so.

Mr. D. N. Campbell-Savours: On a point of order, Madam Speaker. Could I raise with you, for perhaps the fifth time, the rights of Members in tabling questions to the Deputy Prime Minister?
When I last raised the issue, you asked me to approach the Chairman of the Procedure Committee. He has replied to me. Perhaps I can draw your attention to his letter. It casts the matter back into your court to some extent. He says:
As I understand it, several oral questions that you have tabled to the Deputy Prime Minister have been transferred, despite the fact that in oral supplementaries he has responded on very diverse issues beyond the strict agreement of his declared responsibilities.
This is from the Chairman of the Procedure Committee. He continues:
As you know, Ministers can transfer questions should they wish and only the Speaker can control the subject matter of oral supplementaries in ministerial answers. While it is evident that a problem does arise for an apparent mismatch between the scope of Mr. Heseltine's formal responsibilities and the matters which are raised with him in oral supplementaries, I"—
that is to say, the Chairman of the Procedure Committee—
cannot see any scope for useful intervention at this stage by the Procedure Committee.
It seems to me that the responsibility has been put back in your court to rule on the matter.
May I make a 'suggestion? It is that, when the Deputy Prime Minister next answers questions at the Dispatch Box, the moment he moves out of his departmental responsibility, you intervene and ask him to take his place. Then we shall see—

Madam Speaker: Order. I am prepared to deal with the matter. It does not get us any further when letters of which I have not had sight are quoted at me across the Floor of the House. I should like to have had sight of the letter.

Mr. Campbell-Savours: I am sorry.

Madam Speaker: I cast no aspersions. I simply say that it uses up the time of the House to quote letters in full which I have not seen and on which I cannot give a ruling at this stage. If the hon. Gentleman will refer the whole matter to me, I will certainly take a look at it, bearing in mind the suggestions that he has put to me today.

Mr. David Winnick: On a point of order, Madam Speaker. The next few days are engaged with the Budget on Tuesday and the debates which follow. As I understand it, our first opportunity to question the Secretary of State for Northern Ireland will be on Thursday week. Many of us are deeply concerned about the crisis in what one hopes will be the continuation of the peace process, and the possibility that it will be broken and terrorism will resume. In those circumstances, will there be an opportunity for hon. Members to question a Minister on Northern Ireland developments before Thursday week?

Madam Speaker: The Budget makes little difference to our procedures here. The hon. Gentleman is right when he says that Northern Ireland questions come on 7 December. Of course, there are opportunities to submit private notice questions to me. I understand the seriousness of the situation, and the interest which the hon. Member and many others in the House have during this period.

BILL PRESENTED

HUMBER BRIDGE (DEBTS)

Secretary Sir George Young, supported by Mr. Michael Jack, Miss Ann Widdecombe and Mr. John Watts, presented a Bill to confer power on the Secretary of State to provide that sums payable to him by the Humber Bridge Board shall not be so payable: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 6.]

Orders of the Day — Education (Student Loans) Bill

Order for Second Reading read.

The Minister of State, Department for Education and Employment (Mr. Eric Forth): I beg to move, That the Bill be now read a Second Time.
The Bill is about extending choice. For the first time, students will be able to choose a subsidised loan from a bank or building society. It is a short and straightforward Bill, and it will enable us to test the market to see whether a largely private sector loans scheme would work. There is no hidden agenda. What you see is what students will get—that is, choice and a better service. They can only gain through our proposals.
We are making substantial changes, while retaining key features of the current loans scheme, and I shall begin with our policy objectives for doing so. The Student Loans Company is the sole supplier of subsidised loans. It will continue, but there are few benefits to the consumer in a monopoly. We shall seek to add choice, diversity and competition through the banks and building societies.
Choice and competition will lead to direct benefits to students, in the short term through a better, more convenient and comprehensive service and, as the market develops, through a product better tailored to individual needs.

Mr. Tony Worthington: Having that extra choice sounds like a great deal for students. How many have asked for it?

Mr. Forth: Students are not notorious for coming forward with imaginative ideas in the public arena. As we have often found, it is for the Government to give the lead. Again, as has so often been the case, we have proposed an imaginative scheme, which will benefit students in the long term. I am convinced that the wiser students will realise that immediately and the rest as time develops.
The capital investment in loans is immense—up to £5 billion by the end of the decade. We want the private sector to find much or most of that and, indeed, to take on much or most of the risk. Personal lending at that level is not a natural activity for the Government. We do not have the experience or the expertise that the banks and building societies have. That is their business. They are better at providing a service and a range of financial products. They are better at developing and marketing those products.

Mrs. Anne Campbell: How much interest have the banks and building societies expressed in the scheme?

Mr. Forth: As has been made known, they have been engaged in discussions with Government officials for some time. The process is in the early stages. A draft tender document has been produced. If Second Reading is approved by the House, we propose to produce a tender document. The financial institutions will rightly want to see the fine print and how the matter develops. They will make their judgments on that basis, which is a perfectly normal aspect of the process.

Mr. Richard Tracey: I suppose that in this day and age I should declare an interest. Two of my children are receiving university education. I am sure that my hon. Friend is well aware that all the high street banks offer preferential rates for overdraft facilities for students. They are all extremely helpful to university students and I am sure that they will all be extremely interested in the Government's proposal and that, overall, the students themselves will welcome it. As on so many things, the Opposition, of course, are in the dark.

Mr. Forth: Yes. When my daughter was at university, I was always intrigued at the willingness of most students to take on bank overdrafts. That was their choice and they each handled it in their own individual way. We are offering students a further choice. They can go to the Student Loans Company or use existing arrangements provided by the banks, and we are now in the business of offering them yet further choice, from which I am sure that they will benefit. Students can see the benefits of the arrangements far more quickly than Opposition Members seem to be able to do. I confidently expect that, if we get the sort of ritualistic knee-jerk opposition from Labour Members today to which we have been used, in a few weeks or months—perhaps it will take them a few years in this case—they will come round to our point of view, as they have done on almost every aspect of education.

Mr. Robert Jackson: Would my hon. Friend cast his memory back to the time when we introduced student loans and the opposition that we had from the Labour party and the Liberal Democrats? They declared that the effect of introducing student loans would be that no more people would come forward to be students. Since then, has there not been an enormous expansion of higher education and an increase in the participation rates of people from less privileged backgrounds, in spite of everything that was predicted by the Opposition?

Mr. Forth: Indeed. That intervention gives me the opportunity to praise the sagacity and foresight of my hon. Friend, who played such a role in the introduction of the scheme. He was right and Opposition Members were wrong. I hope that they will think carefully before they object ritualistically to this development in the market because even they would not want to be proved wrong yet again, although they must be getting used to it.

Mr. Mike Hall: In 1989, we were told that the banks were interested in student loans, but they pulled out. What is different now?

Mr. Forth: Oh dear, the hon. Gentleman has not noticed what is different between 1989 and now. Surely he cannot have failed to notice the enormous increase and development of the higher education sector. He has obviously failed to notice that many hundreds of thousands of students have freely come forward, seen the benefit of student loans and taken them up. As for the financial institutions, they will make up their own minds as to what role they wish to play and how far they wish to take up the opportunities that are being given to them. This is an enabling provision and it is a matter for them about which they can make up their minds freely.

Mr. John Gunnell: The Minister tells us about the number of students who have taken up loans. What comment has he on the number of


students for whom loans have been available but who have not taken them up? Why is it that 45 per cent. of students have not taken up loans?

Mr. Forth: Those students are obviously so well catered for that they do not need to take up the loans. Opposition Members cannot have it both ways, as the hon. Gentleman seems to imply. The loans are there for those who wish to take them up, but there is no obligation. As for those who can manage perfectly well without the loans, I say well done and wish them luck.

Mr. Cynog Dafis: I shall mention this again later, but I have been speaking today to the welfare officer at the University college of Wales in Aberystwyth. He tells me that people from low-income families are fearful of taking up loans and are being forced into things such as part-time employment because of their anxiety about the debt that they will incur and the fact that they will cause difficulties for their parents as a result of taking out loans.

Mr. Forth: I understand the hon. Gentleman expressing a point of view having talked to someone directly involved with that small proportion of students who get into difficulties. That is, after all, the role of the person to whom the hon. Gentleman spoke. The overall picture, however, is quite different. The figures irrefutably show that the lower-income groups have come forward in ever greater numbers in the past few years to take advantage of higher education. Whether it is the taking out of loans—which benefits lower-income groups more—or the sheer numbers, the evidence is there.
I suspect that if the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) spoke to other Opposition Members and compared notes, he might well find that, depending on their background and the income available to them, students may or may not want to resort to the loan scheme. That is a matter of choice for them, but I do not believe that it creates any additional pressure. I am sure that hon. Members who have taken an interest will know that the average loan outstanding at the moment is some £1,400 and that the average repayment for those who have had a loan is about £18 per month. It is straining it a bit for anyone to suggest that that is particularly onerous or burdensome on individual students.

Mrs. Maria Fyfe: Will the Minister tell the House the amount of grant available to students in each of the past five years and the amount of maximum loan available in each of those years? Is it not the case that the figures clearly demonstrate that students have been forced into loans because their grants have been smashed?

Mr. Forth: No, the figures would demonstrate—I do not have them in front of me, but I can certainly provide them to the hon. Lady either later in the debate or perhaps in writing—what we have always said as a matter of stated policy: that we wanted to shift the burden of student finance, gradually and in a controlled way, from the 100 per cent. reliance on grants, which was the case in the past, on to loans.
I should be interested to hear from Opposition Members, perhaps from the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) or her colleagues on the Front Bench, whether the Opposition would do things differently or reverse the process and, if so, where they would find the money. It is a

legitimate subject for debate. We have laid our cards on the table. We have said over and over again that we ought to shift the burden from grant to loan. The Bill is a further development in that process.
In the longer term, there are other advantages in having the private sector more closely involved in higher education. We are encouraging education-industry links across the board. Those links mean better understanding. The resources and expertise of the private sector will become available to education. Education will therefore meet employers' needs more effectively. In that way, there is a co-operative approach that can only benefit both business and education. Providing subsidised loans, whether public or private, entails a cost to the taxpayer, but we seek to ensure that those policy objectives are realised in the most cost-effective way.
The expansion of higher education since the Government came to power in 1979 is startling. Student numbers have doubled. Almost one in three young people now enter full-time higher education, compared with only one in eight in 1979. The number of mature entrants has risen by over 150 per cent., a rate nearly as fast as for young entrants. There were 174,000 graduates in 1993–70 per cent. more than in 1979. Among European Union countries, only Denmark has a higher graduation rate. We spend more per higher education student than any other European Union country. We run a system that is both efficient and generous. We have transformed it from an elite system to one for all, which no longer caters for a privileged few supported by privileged families and the taxpayer.
Those important changes will last as long as anything that the Government have achieved. Opposition Members say that they support expansion, but this Government have achieved it. What we need to do now is pause and consider the next steps. We are consolidating the participation rate at some 30 per cent. over the next three years, to enable universities to concentrate on maintaining and improving quality in teaching and research, which is of the highest priority. It will give us an opportunity to conduct a wide-ranging review, which will look at the purpose, size and shape of higher education. It will also look at the contribution that higher education makes to the economy, and how it prepares young people for employment and prepares people throughout their working lives for the opportunities that they seek. Those issues require careful thought and we intend to issue a consultative paper in the new year.
In the meantime, however, it makes sense to press ahead with this Bill to improve the loans system. The landscape has changed rapidly since the House debated the 1990 Act. That may be an answer to the question put by the hon. Member for Warrington, South (Mr. Hall). At that time, all we heard from Opposition Members was that it would all end in disaster, students would not take out loans and students from poorer families would be denied access. That has all turned out, patently and demonstrably, to be untrue. Student loans are a great success. Many Opposition Members—I hope that we shall hear more of this during today's debate—now believe that loans are here to stay, in one form or other. It warms my heart that this is yet another example of Opposition Members eventually coming round to accepting an established Conservative principle.
The increase in loans has been dramatic. Some 180,000 were taken out in 1990–91, which means that they were taken out by 28 per cent. of eligible students. Some


517,000 were taken out in 1994–95, which means that they were taken out by 55 per cent. of eligible students. We believe that that growth will continue and we forecast a take-up rate of some 80 per cent. by 1997–98.
There is no evidence that loans are discouraging entrants from poorer families, as the hon. Member for Ceredigion and Pembroke, North tried to suggest a moment ago. That assertion was made in 1990, when Opposition Members opposed that Act. It made no sense then and it certainly makes none now. Loans—with handsome deferment rights linked to income—help the poorest students. An increasing proportion of higher education entrants come from less well-off families.

Mr. Worthington: This is very interesting, but the central reason for the Bill is completely separate. What contact has there been between the Chancellor of the Exchequer and the Department for Education and Employment about the necessity to get student loans out of the public sector to lower the public sector borrowing requirement?

Mr. Forth: The contact between my right hon. and learned Friend the Chancellor of the Exchequer and my right hon. Friend the Secretary of State is close, harmonious and fruitful, as ever. The Government as a whole are happy and content with the thrust, direction and purpose of the Bill. They could scarcely be otherwise.
I was giving some background figures. Overall, the number of loan accounts has risen dramatically. In the first year, there were 180,000, and there were just under a million by the end of 1994–95. We believe that there will be nearly 2 million in two years' time. That represents a public sector success, but also a burden. I shall return to that point shortly.
Higher education is, of necessity, costly. The taxpayer, through the Government, has made substantial sums available—£4.7 billion in 1995–96, with a further £1.5 billion for student support. There must be a limit to what taxpayers can reasonably be expected to invest in higher education.
Given our generous student support arrangements, it is not surprising that the number of loans has increased so substantially. Outstanding loans—that is principal and interest—will total some £5 billion by the end of the decade. That is an enormous investment and why I believe it is right to seek to transfer the task of raising that capital to the private sector.
I should like to take this opportunity to pay tribute to the Student Loans Company. The Bill is not directly about the company, which has achieved a lot in a short time, remarkably efficiently. Less than 8 per cent. of borrowers were in default—two payments behind—at the end of the last financial year. A significant proportion of them will eventually correct the position. That is well below the 20 per cent. fantasy figure mentioned by the hon. Member for Bath (Mr. Foster) in the debate on the Address.

Mr. Don Foster: Given the high regard that the Minister clearly has for the Student Loans Company, can he tell the House what its view is of the proposals?

Mr. Forth: I would characterise the view expressed by elements of the Student Loans Company as being understandably typical of anyone in a monopoly position.
There are some in the company who feel uncomfortable at the thought of having another player or players on the field. I do not blame them for that. I can assure the hon. Member for Bath, from the discussions that I have had with key figures in the company, that they accept the policy direction of the Bill. They will be more than equal to the task of making any adjustments necessary if financial institutions take up the opportunities offered in the Bill. In the Student Loans Company, there is a mixture of apprehension and a willingness to get on with the job. I am encouraged by that.
There have been a number of comments about the National Audit Office findings on the sums that will not be repaid to the company. Many have rushed to criticise us on the back of that report and we should be clear what it means. Much of the money will not be repaid because it is our policy that those who cannot afford to pay should not. There are borrowers who will never reach the repayment threshold. The critics must say what they would do. They should say whether we have to hound those borrowers or change the repayment terms. The figures have caused criticism because our repayment terms are sensitive and generous, and take full account of the needs and abilities of individuals.
The Student Loans Company has reduced its administrative costs from £48 to £14 per account over the five years of the scheme. The company has also put recent operational and staffing problems behind it. It will continue to play an important part in student loans, but it cannot provide choice and competition.
The fundamentals of our loans policy are sound and will remain unchanged. Whether public or private, we have no plans for subsidised loans for fees. I wish to make that clear. We have no plans to abolish grants. We plan to achieve broad parity between grants and loans in 1996–97 and then to maintain that parity.
Loans reduce the share of the burden falling to parents and the taxpayer. That must be fair. The main beneficiary should pay some of the costs. After all, many taxpayers earn much less than most students eventually will. Loans increase students' sense of financial responsibility and their stake in successfully completing their courses.
Loans will continue to be made on generous terms, whether public or private. Repayment could be deferred if income was less than 85 per cent. of average earnings. Interest rates are fixed to the retail prices index, and repayments do not begin until the April after graduation.
A lot of nonsense is talked about student debt. The implication of some who make those allegations is that we should be more generous. Those who say that should answer some questions. Who will pay? Should it inevitably be the taxpayer? Should it be the families of the students or the students themselves? Can they afford to pay? All those questions should be answered clearly and systematically by those who seek to criticise the present arrangements and the Bill.

Mrs. Anne Campbell: rose—

Mr. Bernard Jenkin: Will my hon. Friend give way?

Mr. Forth: I shall give way first to the hon. Member for Cambridge (Mrs. Campbell) and then to my hon. Friend.

Mrs. Campbell: As more people, particularly mature students, are coming back into higher education, it is


important that there are some facilities for part-time students. Can the Minister tell us whether the new student loans scheme will cover arrangements for part-time as well as full-time students?

Mr. Forth: I should like to take advice on that and give the hon. Lady a reply during the debate or when I seek the permission of the House to reply. I do not want to give an off-the-cuff answer that might mislead. It is a very important area.

Mr. Jenkin: My hon. Friend discussed the access funds and the important role that they play. Is not it important that we make more money available to the access funds, to help the very people whom the Opposition parties say that they are worried about? However, so that we may be able to afford to do so, is not it entirely right and proper that people should become more dependent on loans and less dependent on grants at the expense of the taxpayer?

Mr. Forth: My hon. Friend makes a very important argument, which I know has worried him and many other hon. Members for some time. We must constantly make very difficult judgments about the way in which necessarily scarce moneys in higher education are used. I shall take my hon. Friend's argument under advisement, if I may, and consider it to discover what can be done to help, but I warn him, as ever I must on such occasions, that, with necessarily limited total moneys, what is allocated in one direction must come from another. That is what makes it so difficult.

Dame Elaine Kellett-Bowman: Is there any possibility of giving help to the small number of students who must take a year out and then return to their studies, who at the moment find it extremely difficult, especially with the council tax and so on?

Mr. Forth: My hon. Friend has put a finger on an aspect that causes difficulty to some people. I undertake to consider that issue, to discover what help might be given, but I must repeat the health warning that I gave to my hon. Friend the Member for Colchester, North (Mr. Jenkin) a moment ago—it is always a matter of balancing what is available with the severely competing needs.

Mrs. Fyfe: I thank the hon. Gentleman for his courage in giving way once again. Has he heard of a study published by the Scottish citizens advice bureau in August, entitled "Poverty by Degrees"? It referred to the fact that students have visited citizens advice bureaux because of the poverty that they experience; the CABs have had to refer them to charities providing free food. Does the Minister believe that taxpayers are so anxious to have their tax reduced by every penny possible that they want students to be in that condition?

Mr. Forth: Taxpayers might want to know considerably more about the circumstances of students who find themselves in the position that the hon. Lady describes. When I visit campuses, I am always impressed by the number of students occupying the beer bars and enjoying many of the other benefits of higher education. The truth is that, as is the case in so many other aspects of society, the vast majority of students manage their money responsibly and manage to get by very well indeed. Although it is absolutely right that we should give sympathy, understanding and support to those who cannot

do so, I find it difficult to believe, as I believe the hon. Lady is suggesting, that all students are in hardship. It is the way in which individuals manage their resources that is the problem, not all students.

Mrs. Helen Jackson: Given what the Minister said about the importance of mature students, under the new scheme that he is suggesting, will loans be available at the rates suggested for both women and men over the age of 50? It is often at about that age that women start to recognise that they have potential that they want to use, and that men, in cities such as Sheffield, who are skilled and well trained in industries such as steel and engineering, want to take up different careers.

Mr. Forth: In this country, unlike many other European countries, there is no upper age limit in the mandatory awards scheme. I can only say to the hon. Lady, and hon. Members present on both sides of the House, that as soon as one makes an understandable plea for one group of students, one must take the responsibility of identifying where the money would come from to fulfil that purpose.

Mr. David Blunkett: Answer the question.

Mr. Forth: The hon. Member for Sheffield, Brightside (Mr. Blunkett) is muttering across the Dispatch Box. Perhaps he would ask his hon. Friend the Member for Oldham, Central and Royton (Mr. Davies) to say, when he speaks, whether Labour Members are prepared to answer those questions themselves. [Interruption.] There is no point in the hon. Member for Brightside laughing, because if he were ever to be within a million miles of government, he would find that it was almost entirely a matter of making very difficult choices.

Mr. Blunkett: I made difficult choices for seven years.

Mr. Forth: The hon. Member for Brightside is saying, from a sedentary position, that he made difficult choices for seven years, when presumably he bore some responsibility for running Sheffield's finances. If he is suggesting that we take his track record in running Sheffield's finances as his claim to be in government, God help us if it ever happens.

Mr. Blunkett: I cannot resist placing on record what the Audit Commission said about my time as leader of Sheffield city council, which was that we delivered the best public services in Britain, and Sheffield was a shining example.

Mr. Forth: At whose expense did the hon. Gentleman deliver the best public services in Britain? The rest of the country might well have something to say about that.

Mr. Robert Jackson: rose—

Mr. Forth: I must move on.
We are already more generous than most other countries. Students with a mandatory award pay no tuition fees, which is not true of many other countries sometimes cited as paragons by those who criticise us. Our maximum grant is greater than that in France. Japan, often held up as a shining example in education, offers no grants. In some countries, interest payments are greater than inflation; in some, repayment is not income contingent. One would therefore have great difficulty in finding any country that is doing better than we are.
Our scheme provides a good balance between the needs of student, parent and taxpayer. I shall describe briefly the way in which our proposed system would work.
Private financial institutions would be invited to bid for the right to offer subsidised loans. That would probably be for a period of five years. Loans would be made on comparable terms to those offered by the Student Loans Company, and we envisage selecting up to four other lenders.
Students would then be able to choose either public or private loans. If they chose the private sector, they would choose between the successful bidders. If not, they could still opt for a public loan from the SLC. We shall make arrangements to ensure that students could not obtain a loan from more than one source in any one year.
In choosing a private loan, students would have access to a better, more convenient and comprehensive service through lenders' branch networks. They could link loans to other financial products and services.
I have no doubt that private sector competition will lead to more attractive products. What do students have to gain from the uniformity based on an equal minimum? I believe that we have moved on from that, and I believe that more and more students recognise that.
I shall summarise the Bill's provisions.
Clause 1 contains the main provisions of the Bill and specifically gives us the power to pay subsidies to private sector lenders. Subsection (1) amends section 1 of the Education (Student Loans) Act 1990 to add that power. Subsection (2) covers the Bill's schedule and makes consequential amendments to the 1990 Act and schedules. They reflect the fact that we would have twin public and private tracks for loans.
Clause 2 allows a similar provision to be made for Northern Ireland.

Mr. Harry Barnes: When the Education (Student Loans) Act 1990 passed through the House, it was opposed by people of all shades of political opinion in Northern Ireland, ranging from the Democratic Unionist party to—outside the House—Sinn Fein. The only party in Northern Ireland that gave any support to the 1990 Act was the Conservative party, which was of no significance in Northern Ireland.
As clause 2 would apply the measure before us to Northern Ireland by the negative procedure, should not that clause be changed so that the House has a chance to discuss, under the affirmative procedure for statutory instruments, whether the provision should extend to Northern Ireland, where there is absolute opposition to the student loans scheme?

Mr. Forth: My opinion now—although I shall check for the hon. Gentleman—is that, as he knows, that is the usual way of dealing with Northern Ireland in most public Bills. It is generally a satisfactory arrangement, but later in the debate or during my speech in reply, if I am given permission to do so, I shall specifically discuss that matter.
However, I am not sure whether, even in the case of Northern Ireland, one wants to start singling out parts—however distinguished—of the United Kingdom and treating them differently from others. I am aware of no

reason why students in Northern Ireland should not receive the benefits of the Bill's provisions that students elsewhere will receive, but I shall return to that subject later.
Clause 3 contains financial provisions in relation to subsidy and administrative costs arising from the Bill. Clause 4 contains the citation provisions and extends the Bill's provisions to Great Britain.
The 1990 Act set a framework for public loans based on regulation. That system works well for grants and loans, but I do not believe that it is appropriate for the private sector. Instead, tightly drawn contracts would protect students: in particular, deferment rights and a retail prices index maximum on interest rates would have to be safeguarded. In other respects, I consider it sensible to employ a light touch.
Student loans share the costs of student support more equitably. That is why the system is right and successful. The proposals in the Bill would add the further advantages of choice and competition. It is a straightforward Bill with, I believe, no down side, and it ought to be supported by all who want a loan scheme that is fair to both students and the taxpayer. There are valuable opportunities for the private sector and for students, and I hope and expect that those opportunities will be taken. I commend the Bill to the House.

Mr. Bryan Davies: Opposition Members recognise that the funding of students in higher education poses significant policy issues. We do not have a closed mind on those issues, but we believe in clear principles, on which the funding of such students should be established. We intend to test the Bill against those criteria.
First, any system of student funding must encourage, not discourage, access to higher education for people from all social backgrounds. Indeed, active measures should be taken to ensure that participation in higher education reflects the wider composition of society. Although the Minister pointed out that higher education opportunities had been expanded, he did not mention the fact that we have not succeeded in encouraging an increasing proportion of students from less well-off homes: the proportion of students from social classes A and B has remained relatively unchanged during the past decade, despite the changes in student numbers.
Secondly, student funding should protect, and aim to enhance, the quality of higher education, which is a vital national asset and should not be sold short.

Mr. Gyles Brandreth: The hon. Gentleman may have different information from that which I received from the Department. I understood, however, that the recent survey showed that in social grades A and B, the numbers taking part in higher education had fallen by about 6 per cent., but that there had been a corresponding rise in the proportion among the lower social groups. That, I think, contradicts what the hon. Gentleman said. I am sure that he will want to put the record straight.

Mr. Davies: The hon. Gentleman should recognise how marginal the changes are. Two thirds of higher education entrants come from relatively well-off homes, and that


statistic has scarcely changed throughout the period of expansion. It is clear that the Government's current system, and the system proposed in the Bill, do not significantly extend opportunities for access to higher education among many young people.
Thirdly, student funding should be equitable between different groups, rather than discriminating on the basis of, for example, modes of attendance. The Minister was unable to tell us whether the Bill would extend to part-time students. Given the issues raised by the current system, under which loans are available only to full-time students, I should have thought that such an important matter could at least have been clarified—to say nothing of the additional point made by my hon. Friend the Member for Cambridge (Mrs. Campbell) about mature students.
Fourthly, any system of student funding should be fair to both students and the taxpayer. That means that it must be efficient and progressive, and should set out to ensure that no student suffers hardship.
The Government's proposals meet none of those criteria. The Bill is ill considered and divisive; it is a pathetic response to the problems faced by higher education students, and to the global challenge that we, as a society, face to improve the performance of our education system. The Bill simply transfers to the private sector all the failings of the current student loans scheme. Instead of one good scheme, we shall have two bad schemes. Although the Minister set out to defend the existing scheme, the general experience of students, and of Opposition Members, is that it is already deeply flawed.
In fact, the scheme is universally condemned. It requires graduates to repay loans over a five-year period at the start of their careers, when their earnings are at their lowest. That places a considerable burden on graduates, and leads to high deferment and default rates. Some 43 per cent. of students defer repayments, and 7 per cent. are in default.
The system is unfair. It does nothing for further education and part-time students—unless, that is, the Minister is to announce an important new progressive stance. Such a change in his position has certainly not been heralded. We should like clarification of that before the end of the debate. Loans are concentrated among a minority of those in post-compulsory education, and only 55 per cent. of those people have taken advantage of the scheme. Students recognise its flaws.
A central plank of state support for students is simply not delivering. The scheme itself is inefficient, and the Student Loans Company has been plagued with problems. During the autumn of last year, 35,000 students experienced extensive delays in receiving their loans. There was administrative chaos. As the National Audit Office reported only last week, the company received more than 1 million calls in November 1994, but only 41,000 students succeeded in getting through. There was a complete breakdown in the company's ability to respond to students. Given the grant cuts that the Government had enforced, that meant that thousands of students were deprived of the resources that they needed to continue their studies. I recognise that the company—under its acting chief executive, Sir Eric Ash—has taken action to remedy the problems, and I welcome that; but it is not the

same as tackling the problems of the scheme itself, for which the Government rather than the company are responsible.
The Government now propose to persuade the private sector to take a share of those troubles and difficulties. They have apparently not consulted anyone about their plans. Both the universities and the students deny that they have been consulted; they have simply been the unfortunate recipients of the Government's botched measures. Nor, it seems, was the company itself consulted. Its acting chief executive said as much on the radio recently. He also said:
The message I'm getting from the banks … is that they're not really very interested.
That message is coming across loud and clear.

Mr. Forth: I suspected that the hon. Gentleman would pick up Sir Eric's slightly unfortunate remarks, and I arranged for the position to be checked very carefully. My officials had discussions with the Student Loans Company on the subject as long ago as early August. I have personally discussed it with Sir Eric on two occasions, and my officials have had discussions with board members on at least four other occasions between August and October. I am sorry if the hon. Gentleman has been misled, but I checked the record very carefully, and those are the facts.

Mr. Davies: I accept what the Minister has said: such a meeting undoubtedly took place. "Consultation", however, suggests that someone is listening when the contrary point of view is presented. It is clear from what Sir Eric has said that the Government's proposals do not enjoy his whole-hearted support—and we should not be at all surprised at that.
It is clear that the financial institutions also have their doubts. The Woolwich and the Abbey National building societies are already reported to have turned the Government down; the Co-operative bank cannot envisage becoming involved, and neither can the Royal Bank of Scotland. A spokesman for the Midland bank has said:
This is a high risk venture and we see considerable problems in managing this book. It is not the most attractive proposition in the world.
You can bet your bottom dollar that it is not, given our experience of the Student Loans Company thus far. Barclays bank has said much the same thing. The House will recall that the banks pulled out of the last attempt to get them to participate in a student loans scheme. Perhaps that was a testimony to the negotiating skills of the then Chief Secretary of the Treasury, the present Prime Minister. A more charitable interpretation is that the banks predicted nothing but problems, and why should their views have changed?
Sir Christopher Johnson, the then chief economic adviser to Lloyds bank, advised his bank to have nothing to do with the last scheme. Last Friday he wrote in The Times Higher Education Supplement that the Government's new proposals made him "despair"—and who would disagree? He said:
There is every sign that a half-baked idea has been launched prematurely to get it into the Queen's Speech in time. Haste born of financial desperation is not a good recipe for fundamental reform.
However, the most telling testimony is that of the governing party. The Conservative national policy group on higher education has described the current loans


system as "inadequate" and "highly inefficient". Why should the banks become involved when the Tory party can muster no better recommendation of Government policy than that?
The proposals are unlikely to interest the banks. Student loans are an uncertain business and the repayment mechanism is not secure or efficient. If the banks are to be involved, they will clearly need huge subsidies from the public purse. Sweeteners will be needed to cover interest rate subsidies, default levels and administration costs.

Mr. Tracey: Will the hon. Gentleman give the House straight answers to some straight questions? Would the Labour party in government return to a complete grants system? In other words, does the Labour party envisage providing more than £3,000 per year to students? How would the Labour party pay for that? Perhaps the hon. Gentleman would like to comment on the idea of a graduate tax, which the hon. Member for Sheffield, Brightside (Mr. Blunkett) has talked about.

Mr. Davies: The Labour party is engaged in a true consultation exercise: we are listening to what the wider community is saying. Whereas the Government's proposals are being roundly condemned by all relevant interest groups, our policy will be based upon a close appreciation of what will best serve the needs of education.
The legislation represents the Government's attempted solution and they are legislating in haste before they have concluded negotiations with the private sector. Can the Minister advance the name of any financial institution that is prepared to sign on the dotted line? If that is asking too much, can he name anyone who favours the proposals? I believe that he cannot, but perhaps the Minister will address those issues, and fill some of the gaps in his original contribution, if he seeks leave to wind up the debate.
The Minister wants Parliament to issue a blank cheque. The Government need something to interest the private sector as they have placed themselves at a disadvantage at the negotiating table. The Bill is already before the Parliament and, therefore, the Government have made a commitment to a policy that the private sector must underwrite.
The Minister claimed that his proposals will provide students with a choice. That should warm the hearts of Tory Back Benchers: a privatisation measure involving additional choice. Can one doubt that they will rush uniformly into the Division Lobby? However, if they ponder the facts, they will find that the measure will not give students a choice. The terms of the loan will remain basically the same. Students will have no effective choice—in fact, they will be placed at a disadvantage. The draft tender document suggests that the banks will be able to pick and choose to whom they will lend. They may even choose to negotiate a shorter repayment period. The banks can tie a bigger millstone around students' necks and the Government will call it choice.

Mr. Brandreth: I am delighted to hear the hon. Gentleman praise the notion of choice. In political terms, the electorate is faced with a choice. It is clear what the Government are setting out: £4.7 billion per year to be

spent on our colleges and universities and a student loans scheme with extended opportunities. However, the hon. Gentleman has not made clear the Labour party's policy. Would £4.7 billion be sufficient? Would there be more money and, if so, how much more? What is Labour's specific proposal? The hon. Gentleman says that he likes choice; perhaps he can put a choice before those who are listening to the debate.

Mr. Davies: I am not surprised that the hon. Gentleman has intervened in my speech for a second time, as it is his last chance before tomorrow's Budget Speech to give the Chancellor some idea of where the nation's priorities should lie. He makes yet another attempt to cull from Labour answers to questions that the Government are manifestly failing to answer effectively.
As to the issue of choice for students, do the Government suggest that students will have real negotiating power when applying for loans from banks? How can a student, who is facing real hardship and who has no parental support to call upon, dictate terms to a major clearing bank? The idea is laughable. If the Government have their way, it is the banks that will choose. They will pick and choose between students. They will ask students questions such as, "What do your parents do and what do they earn? What degree are you doing? What career are you hoping to pursue?"
The Bill will create a two-tier system whereby well-off students and those with particularly good prospects will go to the banks and the rest will go to the Student Loans Company, which will be left to carry worsening default levels on its loans.

Mr. Barry Porter: I am still rather puzzled. I do not blame the Opposition for not saying what they are in favour of, but I cannot work out what they oppose. Do they oppose student loans in principle, or the proposed mechanics of delivering those loans?

Mr. Davies: We oppose the proposals in the Bill, and that is why I shall ask hon. Members to vote against the Bill at the conclusion of the Second Reading debate. I am outlining why the Bill will not offer choice to students, will not create increased opportunities and will certainly damage those students who are less well off. Under a guise of choice, the Student Loans Company will become the lender of last resort. The Bill will do nothing to alleviate student hardship.
The Minister does not seem to recognise the hardship that many students face today. He said that he meets with students in bars—and presumably he drinks at their expense because he suggested that students are rather lavish with their resources. It may simply be that they are excessively generous—even to Ministers who are not concerned about their real needs.
When the Minister visits universities, does he not talk to those who distribute hardship funds? Does he not talk to ordinary students who are trying, for example, to cope with the fact that residential costs at many of our universities exceed the grant that the Government advance to students? I suggest that the Minister be a little less selective about the places where he meets students. When students are in a less generous mood and not so involved in socializing—which he seems to encourage from time to time—they will tell him a few home truths.
We must recognise the worrying signs, such as the increasing drop-out rates at British universities. In some cases, full-time students have become part-time students. Lecturers and students will confirm the extent to which students are working part time while studying.

Mr. Jenkin: Is the hon. Gentleman reluctant to explain his own party's policy on student maintenance simply because it has no policies? Is the hon. Member for Sheffield, Brightside (Mr. Blunkett) once again in the unhappy position of being sat upon by the hon. Member for Dunfermline, East (Mr. Brown)?

Mr. Davies: The hon. Gentleman should recognise that the Bill was introduced by the Government whom he supports and that it is the issue on which we shall reach judgment this evening. He should also recognise that the Government are involved in an extensive consultation exercise on higher education. Why are they rushing to implement one particular measure when a whole range of higher education issues are part of a national debate to which the Labour party is proud to make a significant contribution? We shall continue to do so and we shall produce our policy in our own good time.
The Minister does not need to await the outcome of such a consultation process because his mind is made up, whatever anybody else has to say. In a modern democracy, an Opposition party shortly to take up the responsibility of government must adopt a different approach.
The Government have also withdrawn a whole range of student benefit entitlements. This year, they have cut the grant and, as my hon. Friend the Member for Sheffield Brightside (Mr. Blunkett) has said, they have withdrawn the mature students allowance so that, in the past year, discrete bodies of students have been suffering from policy choices by the Government.
To cap it all, the Government even overturned a High Court ruling that would have allowed students who temporarily suspend their studies to claim social security benefits. The judge ruled that if students have no entitlement to grants and loans when they temporarily withdraw, they must have some means of support. The Government did not agree and suggested that they should claim discretionary awards. What discretionary awards did they mean? Under the present privations of local government finance, the Government must surely recognise that discretionary awards have all but disappeared.
The real motive behind the Bill has nothing to do with advancing opportunities in higher education, providing adequate support to students or improving education provision. It is a way to generate public expenditure savings to pay for tax cuts in tomorrow's Budget.
Instead of seeking to lever in private finance to increase the resources invested in higher education, the Government are simply trying to divest themselves of responsibilities. Absolutely nothing in the Bill or in the Minister's speech suggests that the savings that will accrue from the privatisation of the loans will be used to tackle student hardship or to increase access to higher education. Indeed, we do not even know what the savings will be. How could we?
The financial effects of the Bill will depend on the arrangements with the private sector and the number of students who choose to take out private sector loans. Will

the Minister tell the House what savings the Government expect to accrue and how? Will he guarantee that any such savings are destined to go back to higher education?
It is clear, however, that any savings will be short-term ones. In the long term, any loan scheme should reach equilibrium between inflows and outflows. It is only because the Government's original scheme proved to be such an expensive mistake that they are trying to shuffle it out of the PSBR.
The chairman of the Conservative party said that the Queen's Speech was intended to smoke out the Opposition, and that is another failure for the Government. Instead of setting out a programme to tackle the huge problems that we face in society, they are merely trying to garner each scrap of political advantage.

Mr. Jenkin: Will the hon. Gentleman give way?

Mr. Davies: No. I have already given way to the hon. Gentleman.
The Bill does not begin to address the huge global challenge that we face to improve our educational performance. The Bill provides for the privatisation of student maintenance but does nothing at all for education. It does not set out a framework for lifelong learning or for the sustained effort that we shall need to equip our people with skills and abilities for the next century; it merely builds on a scheme that is flawed and failing.
The Bill offers the Student Loans Company—itself the subject of a great deal of justified criticism—the desperate role of lender of last resort for those whom the banks reject. Far from addressing the acute problems of student hardship and the need to widen opportunity and promote a learning society, the Bill merely saves the Treasury money. It is all about diverting money to the short-term needs of the Tory party's election prospects rather than about long-term investment in our people. The Bill does not smoke out; it fiddles while Rome burns and I ask the House to reject it.

Mr. Robert Jackson: I hope that the House will forgive me if I begin with some ancient history that, I believe, will shed light on this welcome little Bill and provide a necessary introduction to the somewhat futuristic remarks that I intend to make in concluding my speech.
When I was appointed Minister for Higher Education and Science after the 1987 election, one of my principal tasks was to devise a way of fulfilling the Conservative party's election promise to introduce a system of student loans to compensate for the proposed removal of students' entitlement to social security benefits.
When I arrived at the Department of Education and Science, some of the groundwork for that policy had been done by my predecessor, my hon. Friend the Member for Buckingham (Mr. Walden), but his work had reached an impasse because the Treasury took the line that student loans should be introduced with no net increase in public expenditure. As the savings from student disentitlement to social security benefits were worth no more than a couple of hundred million pounds, that would have meant either the provision of student loans at a wholly nugatory level, incapable of justifying the administrative costs, or


an immediate move to the wholesale replacement of student grants by loans, which would have been hard to achieve politically.
For tactical reasons, so as to get the discussion going again, I decided to propose a scheme for student loans raised and provided by the private sector. My proposal was based on the premise that it would be possible for the Government to subsidise such private student loans and to treat the risk of default as an insurable risk, with the Government paying all or part of the premium for such insurance. On that basis, the social security savings could be used to pay the premium and to provide the subsidy, leaving the student loans system to be funded by the private sector, thus achieving the Treasury precondition of no net costs to public funds.
I had a further, strategic, motivation as well as that tactical motivation for proposing a private sector scheme and I shall return to that later. I am glad to say that my proposal had the desired effect of putting the Treasury on the defensive and reopening the blocked discussions.
Treasury officials had two objections. First, and rather absurdly, they argued that the student loans scheme should be publicly funded because the Government could always borrow more cheaply than the private sector—an argument for replacing all private investment by Government investment and proof of the inherently socialistic tendencies of the Treasury.
The officials' second line of argument was more interesting and more difficult to address: that even if there were only a small amount of public subsidy and risk insurance guarantee, the volume of funds from the private sector made available as a result of such subsidies and guarantees would necessarily have to count as a contingent liability and as part of public expenditure. That definition was presented as a fundamental proposition of Treasury metaphysics—one of those tablets-of-stone absolutes around which no progress can be made.
The exchanges gave me the basis for a serious discussion with Treasury Ministers and, after a tête-a-tête with Nigel Lawson, the Treasury gave up its insistence on no net additional cost, thus opening the way to the present student loans scheme, which I believe is currently costing an additional £1.3 billion of public money.
My purpose in reciting that ancient history is to draw attention to the Treasury doctrine on the way in which private sector funds, guided in a particular direction by public subsidy or risk insurance, should be counted in relation to the public sector borrowing requirement.
In introducing the Bill, my hon. Friend the Minister—and I am glad to welcome him to his position—described its purpose as being essentially to introduce an element of competition for the Student Loans Company in the provision of student loans and an element of choice for students. That is certainly very welcome, but I suspect that it looms less large in Treasury thinking than what I understand, reading between the lines, to be a further objective—to shift as much as possible of the burden of financing student loans from the PSBR to the private sector. If I am right in that understanding, it would appear that the Treasury has done some welcome rethinking about the doctrine with which I was confronted as an unrevisable absolute in 1987. I take it that the rethinking that has been occasioned by the private finance initiative

now leads the Treasury to be prepared to consider as falling outwith the PSBR those funds that are generated from the private sector by an element of public subsidy and public risk guarantee.
I do not propose to press my right hon. and hon. Friends for further illumination on that point, but I guess that the critical issues will be the amount of the subsidy and the extent to which the risks will be shared. The danger will be that the Treasury's terms will be such that private operators simply will not take up the opportunities presented to them by the scheme. However, I want to stress that if the Treasury's thinking has indeed moved in that direction, whatever difficulties there may be at the start of the new scheme, it is good news and, in particular, it is good news for the universities. At first blush the universities may not recognise that, so I want to explain why I think that it is, in what some will no doubt regard as a futuristic account of the way in which I believe policy in these matters should develop in future.
I mentioned that I had a strategic as well as a tactical reason for trying, back in 1987, to press the case for a private sector student loans scheme. I promised to say more about that. My strategic concern was to promote the autonomy of the universities and to reduce the extent of their financial dependence on the state. It is a concern that I believe should be central to our higher education policies. I very much regret that it is a concern that is honoured rather by lip service from the Government, from the different parties in the House and, I sometimes think, even from the universities themselves.
I shall briefly state why I consider the financial autonomy of the universities to be important and then go on to show the link between that concern and the question of private sector loans to students. When the Government provided a measure of temporary financial support for the universities after the first world war, administered by a temporary University Grants Committee, they inadvertently laid the basis for the nationalisation of higher education. Over the years, we have reached a position where higher education costs the taxpayer some £8.5 billion a year—2.5 per cent. of total public expenditure.
In legal form our universities continue to be private corporations, but the reality of power in higher education is that the balance between the autonomy of universities and their role as the agents of Government policy has shifted steadily—and, in recent years, dramatically—against the principle of university autonomy. After a brief period during which the uncapped fee funding system, which I promoted within government, restored to universities their freedom to determine their recruitment policies, the overall size of each university is again effectively determined by Government agencies—the higher education funding councils—which fix the price that will be paid on behalf of each student and cap the level of student numbers from the United Kingdom and the European Union in each institution.
I am delighted that another policy that I introduced has survived in better shape—the separation of research funding from the funds for teaching and the more selective allocation of funds for research. That gives freedom to the universities to improve their research income from Government sources by improving their research performance. However, despite such welcome shifts, in general, over the years, the whole relationship between Government and the universities has become


more and more bureaucratic, more and more impersonal, less and less flexible and less and less supportive of the idea of university self-government and self-direction.

Mr. Forth: I am following my hon. Friend's well-thought-out and erudite analysis—as ever—closely and with fascination. I wonder whether he means to suggest to the House that, over a period of time, the Government have in any way transgressed on higher education's traditional academic freedom as opposed to the financial relationship between the taxpayer, through the Government, and universities. Or does he feel that the increasing attraction of private sector money—a very successful trend recently—ameliorates the process that he has described?

Mr. Jackson: It is my argument that there should be a great deal more private funding for universities and I shall develop that point later. It is a profound mistake to think that there is no connection between funding arrangements and academic freedom—they go hand in hand. Although there is no desire, will or evidence of any policy to infringe academic freedom, the fact is that the conditions in which academic freedom could be infringed are steadily being created by the nationalisation of higher education that I have been describing. We should do something about that. I believe that in the process of the bureaucratisation of the nationalised system of higher education, values of intellectual independence and academic responsibility, which are central to liberal higher education, are increasingly at risk.

Mr. Colin Pickthall: Will the hon. Gentleman extrapolate from what he has just said, and comment on what my hon. Friend the Member for Oldham, Central and Royton (Mr. Davies) said—that the banks that will administer the loans will have a say in the courses to which they prefer to give awards? Would not that be an infringement of the liberal education that he is espousing, and with which I agree?

Mr. Jackson: To the extent that there is a reliance on private sector funding, all sorts of influences will certainly come from the prívate sector. If a higher education system is funded from a variety of different sources, public and private, and those private sources are in turn diversified, the conditions for autonomy are maximised. What is undesirable is for the university institutions to be exclusively dependent on one source of funding—the Government. That is what I am arguing against.
The universities, faced by that position, have tended to cling to traditional constitutional and legal formulae to protect their position. It is time that they recognised that their approach is obsolete. It worked for half a century in the era of the University Grants Committee, when the size of higher education—and therefore the cost to the taxpayer—was still quite small. The growth of state spending on higher education to its present volume and the development in Whitehall of a less discriminating and more unsympathetic approach to accountability have simply made the old cosy structures unviable—the old system of lunches in the Athenaeum. The best way—I now believe the only way—for university autonomy to be secured is for the universities to acquire a substantial flow of income that is essentially independent of the state. I emphasise that by this I do not mean that I believe that the whole of the present taxpayer subsidy could or should be replaced from private sources, but rather, as with the

American public university system, that there should be a partnership between public and private funding, with private funding at a level sufficient to give the universities the critical extra margin of financial manoeuvre necessary to safeguard their autonomy.

Mr. Jenkin: Does my hon. Friend agree that the sort of funding system that he is advocating would also lead to a revolution in academic salaries, which we really need in this country if we are to continue to attract the best and the brightest in university teaching and research?

Mr. Jackson: My hon. Friend is absolutely right. One of the most serious social trends in society over the past 20 years has been the pauperisation of the academic profession, which has profound implications for the future of our country. I believe that one of the causes of that pauperisation has been the nationalised bureaucratic system in higher education, which I am criticising.
Before I go on to explain how I think we could get that extra margin of manoeuvre for universities by using the mechanisms provided in the Bill—I am coming back to the Bill—let me say why I believe that objective should commend itself to all hon. Members.
One of the great themes in the constitutional debate that is increasingly at the centre of British politics is the desirability of greater decentralisation in Britain. This is not just a question of devolution to Scotland and Wales or of the relations between central and local government. The Government and the Opposition need to think deeply about the relationship between the institutions of national government in Whitehall and Westminster and the whole range of non-governmental institutions that make up the fabric of our society and our culture.
If the Government and the Opposition are serious about decentralisation, we have to think about how to restore powers not only to local government but to institutions such as universities, which have recently seen their autonomy and their capacity for self-determination increasingly eroded.
To my own party I would say that I have never understood how the creeping nationalisation of our universities, which we have promoted, can be consistent with any recognisable Tory philosophy. To new Labour I would say—

Mr. Barnes: rose—

Mr. Jackson: I want to finish this point. To the new Labour party—the hon. Member for North-East Derbyshire (Mr. Barnes) is old Labour—I would say that I do not understand how sustaining and deepening the nationalisation of the universities is consistent with its new thinking about the need for a more decentralised political and civil society with greater scope and initiative for communities of which the universities are, or should be, a primordial instance.

Mr. Barnes: If the hon. Member feels that way, why did he usher through the House the original student loan scheme? According to his philosophy, that scheme was presumably a nationalised, centralised loan scheme, which is now being altered by the Bill.

Mr. Jackson: It was not the student loan scheme that I wanted. We wanted a loan scheme run by the banks, and it would have been much better if they had played the game and gone along with it. The principle of the student


loan scheme, for reasons that I will show, is absolutely fundamental to the whole project of achieving greater autonomy for universities and greater decentralisation in higher education.
I shall assume that I have carried the House at least part of the way with these philosophical considerations about the need for decentralisation and university autonomy that I have outlined. My argument is that greater independence for universities cannot be secured by constitutional and legal devices alone, and that the best way to secure that greater independence is by giving them an independent source of funding. In my view—this is the answer to the hon. Member for North-East Derbyshire—fee income from students, supported by loans financed against their future income, is the only way to provide such significant independent financial resources for universities; and that brings me back to this little Bill.
A major defect in the Bill is that it does not address the central defect of the Education (Student Loans) Act 1990—against which I fought tooth and nail when I was a Minister but lost—by which the student loans scheme is limited to the provision of loans to support student maintenance only. The 1990 Act must be amended, perhaps by this Bill, to enable loans to be advanced to students to pay the fees charged by universities. Nevertheless, what is positive and significant about this Bill is that it opens the door to loans being advanced to students with private money and by the private sector. Let me explain why I think that is so important.
Even if the 1990 Act were amended to enable loans to be provided to pay fees, so long as the money being used to finance the loans was coming from the Treasury and counted against the PSBR, the Government would have a legitimate interest in limiting the overall funding provided for loans against fees. Because of the way things are in Whitehall and, indeed, in Parliament, that could all too easily turn into a Government policy on the size and shape of fees charged by universities. In that way, the top-up private fees would be not the instrument of the greater university autonomy which we should all be seeking but an instrument for a further extension of Government control of universities.
If, however, the loans to pay the fees were to come from the private sector, there could be no justification for the Government determining the fees policy of the universities, which would be private institutions deciding for themselves the terms and conditions on which they admitted their students. The strategic thought behind my initial proposal for a private sector loan scheme, which I described earlier, was precisely to give the universities that greater freedom. Although that thought came to nothing in 1987, I regard the Bill, and the relaxation of Treasury doctrine that it implies, as marking a potential step in what I consider to be fundamentally the right direction.
I believe that the Labour party is trying seriously to break away from its old image as the tax-and-spend party. In due course, that will oblige it to think more seriously about how the burden of public expenditure can be not only contained but reduced or more equitably distributed. I noted that the hon. Member for Oldham, Central and Royton (Mr. Davies) referred to the fact that so many students come from privileged backgrounds. He might like to reflect on the equity of the distributional effects

that that fact poses. Meanwhile, against all its instincts and traditions, my party, in government, has been operating as a high-tax and high-spend party, but the debate is becoming increasingly serious.
Among the one-nation Tories—among whom I count myself—I notice that no less a figure than the Governor of Hong Kong has been pointing to the difference between the levels of public expenditure in the United States and Japan as compared with Europe, including Britain, and suggesting that there may be some connection between their lower levels of public spending and taxation and their greater competitiveness. The Prime Minister has recently made the same point. Can the new Labour party be far behind? I hope—

Mr. Deputy Speaker (Mr. Michael Morris): Order. I hope that, having asked himself that question, the hon. Gentleman will revert to the Bill.

Mr. Jackson: I was about to do so and to conclude my speech. I hope that the Opposition are increasingly in a mood to recognise the force of the arguments about public expenditure.
If we are to reduce the burden of taxation and the level of public expenditure and bring them even part of the way towards the levels prevailing in the United States and Japan, it would be disastrous to do so merely by spending less on the public sector in its present shape. The result would be an unacceptable degradation in the quality of all collectively provided goods. Instead, we have to reconsider—in Europe and in Britain—which goods are collectively provided in the public sector as compared with the United States and Japan. On such a comparative list, higher education bulks large at 2.5 per cent. of public expenditure.
The United States and Japan both operate the kind of partnership system between private and public interests in higher education that I am advocating. Both have large private universities where full-cost fees are paid by students, and they include, in the United States, some of the best universities in the world. In addition, both have a huge network of public higher education institutions that are partly funded by private student fees. Incidentally, both countries have a higher proportion of their population passing through higher education than we do in Europe, combined with greater participation in higher education by people from relatively unprivileged social backgrounds.
We cannot continue with the present policy of maintaining higher education as a state responsibility while seeking to reduce the burden of taxation and public borrowing in the direction of American and Japanese levels. Under the present policy, the only way to square the circle is systematically to degrade the quality of a university system that is exclusively dependent on public funds. That would be a profound mistake, which could lead only to the progressive dismantling of one of our greatest achievements as a country, which is the culture in our institutions of higher learning.
The way out of the trap is outlined in the Bill—a private sector loan scheme, which, I believe, should be extended to cover fees. I am therefore happy to support the Bill as another modest step down a road that I hope we shall all agree to take in due course.

5. 38 pm

Mr. Colin Pickthall: The hon. Member for Wantage (Mr. Jackson) is always interesting on education. I am somewhat astonished, however, at his surprise at the Government's centralisation. He may remember saying that the possibility of students paying back student loans through the national insurance system was
a very remote mechanism.
He continued:
If we employ it, the fact of an obligation to repay something of the costs of undertaking their studies will tend to escape the attention of the student. But is this desirable?"—[Official Report, 20 October 1989; Vol. 158, c. 449.]
With that rhetorical question, the idea of payback through the national insurance system was dismissed. Had that question been considered at the time or since, many of the problems that I want briefly to address might have been solved.
It is also interesting to note that, in almost every other field, making borrowing easier and smoother for people seems to be the order of the day, whereas the hon. Member for Wantage seems to think that it ought to be made more difficult, in order—no doubt—to teach students the cost of everything.
The Bill is shabby and open-ended, and it demonstrates that the Government have no strategy for higher education—or further education for that matter—beyond cramming in larger numbers at lower unit cost. Student financial support should be straightforward. It should be adequate and available promptly, and should bear in mind the desperate need of the country to engage with three key needs concerning higher education. They are: the need, as my hon. Friend the Member for Oldham, Central and Royton (Mr. Davies) has said, for more students from low-income backgrounds; the need for more students from groups which are not traditionally users—or are under-users—of higher education; and the need to help part-time adult students, who I believe, subject to correction by the Minister, are ruled out of the proposal. The Bill does none of those things. Indeed, its consequences might well worsen the situation.
At present, many students are struggling to balance a grant, which has been systematically reduced in level and availability over the past few years; access funds, which most students clearly consider a joke; Student Loans Company loans, which were in utter chaos last year and are—fortunately—slightly better now; parental contributions; part-time employment, which is needed by an increasing number; bank overdrafts, which many students have; and, for some, problems with grant cuts following semesterisation, when many authorities reduced grants, thinking of the semester as an old-fashioned term.
This new Government wheeze merely adds to the confusion rather than simplifying matters. My daughter, who started university this term, is, like many others, spending a great deal of her time and energy juggling her funding, and slowly embracing the virtues of debt when she does not have to. The advice from tutors at her university, like that from tutors at most universities and colleges, is to go for the loan whether it is wanted or not.
Although evidence is anecdotal, it may well be the case that students from wealthier backgrounds are more likely to take up loans at lower rates of interest, when—

perhaps—they do not really need them. Students from many low-income homes often have a lively appreciation of the horrors of debt, especially since they face a future full of employment uncertainty.
Some undergraduates I know are taking out loans which they do not need at present, and are putting them into bank accounts where they earn a little interest, in order to save for a postgraduate course for which they otherwise would not be funded—whether they get on to that course eventually is another matter. Others, perhaps, put the loans aside for rather less admirable purposes.
My hon. Friend the Member for Oldham, Central and Royton referred to Christopher Johnson, the chief economic adviser to Lloyds Bank plc, who advised the banks when the student loans scheme was introduced to have nothing to do with it, which of course they did not. I, too, read the article in The Times Higher Education Supplement last week. I shall not repeat the quotation cited by my hon. Friend, as he has already put it on record, but will add to it. Mr. Johnson also described the Bill as "timid, incremental thinking", which sums it up.
Indeed, a whole string of bankers and representatives from building societies have said that, as far as they can see at the moment, they want nothing to do with the Bill. Sir Eric Ash, the acting chief executive of the Student Loans Company, raised the question of choice, of which the Minister made a great deal. Sir Eric said:
the idea that this Bill introduces choice I think isn't worth examining".

Mr. Forth: Rather than just quoting Sir Eric with—presumably—approval, as if that were the end of the matter, will the hon. Gentleman expand on why he thinks that that comment was correct?

Mr. Pickthall: If the terms and conditions of loans are more or less the same, if the same people are going for the same sorts of loan, if the eventual funding provided by Government for the interest and the fall-out, and so forth, is the same, the choice is immaterial. One can go to the Student Loans Company, or one can go to one bank or another in the scheme, but the situation is still about the same for the student. There might be a marginal difference between one and the next—

Mr. Hall: There will not be any difference.

Mr. Pickthall: My hon. Friend says that there will not be any difference—perhaps that is not so. Clearly, however, there will be little difference.
It is clear that the student grant has deteriorated so dramatically over the past decade, coinciding with the increase in student numbers, that it will not be possible to restore grant levels to what they were 10 years ago. A loans or repayment system is therefore inevitable. However, that should not mean that Parliament should give the Secretary of State a blank cheque, as this Bill does, or that Parliament should ignore the impact on students in later life when they come to repay the loans.
One reason for the Bill may lie in the philosophy of the former Secretary of State for Education and Science, the right hon. Member for South Norfolk (Mr. MacGregor). He said that the fundamental reason for the introduction of student loans was that top-up loans would
secure changes in student attitudes".
He thought that they would get rid of students'


sense of dependency on the state",
and would promote
a proper sense of self-reliance and responsibility."—[Official Report, 20 November 1989; Vol. 158, c. 381.]
That is social engineering. It is saying that the purpose of loans is to cause problems with repayments. But loans also increase the level of debt among students, especially among those who perhaps do not need to incur it. The Government seem to have espoused in their loans system—and are espousing again in the Bill—a social corrective in the form of the discipline of debt exercised on students as they leave universities. Of course, the only real reason for this extraordinary exercise must be to massage the public sector borrowing requirement, regardless of whether the institutions later take up the Government scheme.
Presuming, however, that the institutions do take up the scheme because the bribes—subsidies, sorry—from the public purse are sufficient, a number of questions need to be addressed, and must be addressed at this stage. First, will the direct debiting for the recall of the debt be limited to one account, as is the case with the Student Loans Company? Will the banks or other institutions involved be able to sell on the debt or move it about among their partners and their subsidiaries? Will the students be guaranteed that they can always go to the same account in the same bank to service that debt?
Will students who fall behind in payments find themselves being blacklisted by the creditworthiness system, so that they cannot take part in other activities, such as mortgage borrowing? I note that the schedule would prevent the selling of information about student loans for purposes such as junk mail or approaches from other companies, but I can detect no provision to prevent the misuse of information about students and their loans, which could affect their financial lives generally.
What are the implications for student borrowers of the link-ups and takeovers of banks and insurance companies? Barring crises and scandals, most people are reluctant to change banks during their lifetime as earners. The banks know that, and are anxious to secure students, as potentially stable if not necessarily high earners. Banks have always been anxious to attract undergraduates, not to alienate them.
I do not suppose that I am untypical in having opened a bank account for the first time with my first grant cheque. I opened an account in 1963—I shudder to think how long ago that was—and, despite quarrels with my bank, I have remained with it ever since. Clearly, banks are likely to be reluctant to tangle with potentially useful customers, just as students will be reluctant to risk their financial good name.
Banks will also be aware of the possibility of exercising discrimination which could give rise to bad relations with students. There could be discrimination in terms of the subject being pursued. As my hon. Friend the Member for Oldham, Central and Royton said, there could be discrimination in terms of the stability of the student's family background and in terms of what sort of person banks judge him or her to he. They could discriminate in terms of interest. rates, as well.
My hon. Friend the Member for Oldham, Central and Royton has made the case against this poor Bill very strongly. I add some thoughts about what the Bill could and should be doing. The Government should look at a payback system which is related to the ability to pay and which comes not through the mortgage-style system, as it has been dubbed, but through national insurance or the tax system.
The Government should not encourage the take-up of debt; students should go into debt only when it is essential for their needs. The Government should try to stabilise the grant element, rather than switching student income to loans, year by year. They should address the problem of funding postgraduate studies and the problem of funding part-time adult students—those that my hon. Friend the Member for Sheffield, Hillsborough (Mrs. Jackson) mentioned, who want to get into higher education for the first time at the age of 50-plus. I have taught many such students in my time, and I found them some of the most exciting and interesting people in higher education. Although their working life afterwards may be fairly brief, they have a tremendous amount to contribute to this country.
Better still, the Government should initiate, as we have, a wide-ranging consultation on the funding of students. They should especially look at the funding of further education students, who are definitely the poor relations of the education system. FE students should not have to rely on discretionary awards, which are under intense pressure as a result of local government cuts year on year. The position will become worse if the Chancellor pays for his income tax cuts tomorrow by further huge raids on local government finance, as has been widely trailed in the press.
The changes in student and in institutional funding over the past decade have, willy-nilly, changed the whole ethos of higher education; that disturbs me perhaps more than anything else. I hate to sound as though I am talking about the good old days; I am not. I realise that old days, when old, are good. However, 20 years ago, there was an assumption that term time for a student was for exposure to ideas, for debate, for research, for analysis, for the production of assignments and for feedback from tutors and teachers. That was intended to lead to the creation of a cultured and rounded intellect.
Vacations were partly for work, to earn extra cash; in those days, part-time and temporary work was readily available. Vacations were also for an intensive slog on the subject matter and for research on dissertations. They were for wider and more intensive reading than there was time for in the day-to-day graft of the university or college term. All that has changed, not just because of lower funding and not just because of loans, but because of modular structures and semesterisation.
The struggle to keep heads above water financially by individual students and by the institutions is wearing away the learning process. Most students have to be turned round in less time and with fewer resources. The time for the production of assignments and for proper feedback on them has been eroded on many courses. Students complain, as they did not do a decade ago, that one assignment pounds on the heels of another, then another, then another.
Anxiety about having the cash to live a decent if frugal life, with far fewer opportunities to earn cash in the vacations, is forcing more students to moonlight, with a


palpable effect on their ability to study. As a tutor in higher education before coming to this place, I watched that process with dismay. It has been confirmed by research at Oxford Brookes university, which estimates that 250 graduates each year gain a class lower in their degree than would have been the case if they had not had to work in the evenings. I know students who work night shifts, to pay their way, and who then go to college in the day. In some cases—I do not want to over-generalise—standards are declining because of all those factors, which sometimes leads to adjustments in the way in which final grades are put together.
Higher education and individual students are infinitely adaptable, but they can adapt only so far before a decline becomes palpable and unstoppable. The Bill does nothing to address that trend, and it will almost certainly worsen the situation.

Mr. Allan Stewart: What was interesting about the speech by the hon. Member for West Lancashire (Mr. Pickthall) was that he actually put forward a policy, in marked contrast to the hon. Member for Oldham, Central and Royton (Mr. Davies). After 16 years of deep thought and consideration, his policy is to say that the issues are complex. We all know that they are complex, but that hardly amounts to a policy. He was unable to tell the House whether a Labour Government would increase, maintain or reduce the total level of expenditure on higher education funding. He was unable to give the House any indication whether the Labour party in government would favour the continuation of a loan scheme, would abolish the loan scheme, would extend the loan scheme, or would bring in a graduate tax.
The hon. Members for Oldham, Central and Royton and for West Lancashire both said that they opposed the Bill. I am not yet entirely clear why. This is an extremely modest Bill. No bank or building society is forced to do anything. No student will be forced to do anything that he or she does not wish to do.
Perhaps I can help the hon. Member for Oldham, Central and Royton in his continuing consultation process by reminding him and the House of the essential case for student loans. It is really quite simple; higher education usually benefits society—although not when a student leaves the country—but it also benefits the student himself directly.
Suppose we take two 17-year-olds, one of whom—let us call him Algernon—wants to be a Labour Member of Parliament. The other, his friend Fred, wants to be a garage mechanic and owner. Under a grant system, Algernon does the obvious thing: he goes to college or university to study politics, philosophy and economics, or sociology. He then goes to London, rents a flat in Islington—to ensure that his career prospects are as bright as possible—and becomes a Labour Member of Parliament.
Fred, meanwhile, becomes a successful garage mechanic and owner. I wish to be charitable, and I will not differentiate between the benefits to society as a whole of Labour Members of Parliament and garage mechanics. Let us assume that both benefit society. But under a grant system, what in effect happens is that Fred subsidises Algernon through his tax payments. There is no social 239912 Q

justice in that, and that is why I believe that there is a strong social justice argument for a loan element within the provision of finance for those in higher education.

Mrs. Fyfe: Does the hon. Gentleman think that there is a strong social justice argument for reducing the grant from £1,795 in 1993 to £1,257 in the next financial year? Have any of the hon. Gentleman's constituents complained to him that student grants are exorbitantly high? None of my constituents has done so.

Mr. Stewart: The point is that the Government have made it clear that they are aiming for a balance between the grant element and the loan element. Recent figures show that the average income of students with loans in 1992–93 was 31 per cent. up on the figure for 1988–89.
The Bill follows the Education (Student Loans) Act 1990. I was a member of the Committee which discussed the Bill, and I recall the arguments that were put again and again to the Committee. Student loans, we were told, would limit access, and would lead to lower numbers of entrants into higher education. As my hon. Friend the Minister of State has pointed out, the reverse is true. There have been steady increases in student numbers, both north and south of the border.
Hon. Members on both sides of the House have referred to the past difficulties of the Student Loans Company, and have stated—rightly and properly—that they believe that the problems are behind the company, which is located in Glasgow. I believe that that is the case, and I pay tribute to the staff working in the Student Loans Company, who have worked extremely hard.
The advantages to the student of the involvement of the banks and building societies in the loans system come from their branch networks and the possibility that the involvement of a bank gives a student to develop a relationship with a particular branch of a bank. That is an important potential benefit to students.
The House will be aware that the proportion of people participating in higher education in Scotland is higher than south of the border. It is therefore particularly important that Scottish banks, which have a well-developed branch network, are involved. I end by asking my hon. Friend the Minister of State for an assurance that he will bear in mind the special needs of Scotland, and that he will do everything possible to involve one or more of the Scottish financial institutions in the scheme when it is up and running.

Mr. Don Foster: A few minutes ago, we heard a thoughtful and provocative speech from the hon. Member for Wantage (Mr. Jackson), and I had considerable sympathy with a number of his remarks. I certainly share his view about the need to reinvigorate the powers of local government, and I accept his argument about the need for a redefinition of the public sector borrowing requirement. The hon. Gentleman might be surprised that I agree that there should be no objection in principle to transferring some of the public debt and some of the risk-taking to the private sector. I do not object to the Bill from those particular points of view.
My objections to the Bill are rather that it fails to address the problems of student poverty and hardship, and fails to address the problems with the current procedures


for supporting students. The Bill does not even begin to acknowledge the concerns which have been expressed during the limited and somewhat desultory consultation process that is going on at present. The Bill simply tinkers around the edges without addressing the key issues affecting students and the higher education system today. Those problems are leading to a significant reduction in the quality of higher education provision.
That students are facing growing problems cannot be in doubt, and I hope to have an opportunity to discuss some of those points in more detail later tonight in the Adjournment debate. The problems centre on the growing level of student hardship and poverty, evidence of which is illustrated by the huge increase in the number of students suffering from stress—largely through financial worries—and seeking counselling and medical support. There has also been a huge increase in the number of students applying for access funds, designed for students with severe hardship problems.
The growth in the large number of students taking on term-time jobs has been mentioned and, sadly, the proportion of students dropping out of their courses and citing financial hardship as the main cause has grown to one in eight. All of those problems are, in part, responsible for the real concerns about the ability of students to gain the maximum benefit from their studies.
My biggest concern is the Minister's inability to respond to a number of points put to him during the debate. The Minister cannot begin to understand the problems of student hardship if he does not even know whether the Bill is, for example, designed to address the problems faced by part-time students. When the hon. Member for Lancaster (Dame E. Kellett-Bowman) raised a real concern about intercalating students, the Minister said that he would have to go away and look the matter up. When the hon. Member for Colchester, North (Mr. Jenkin) asked about the level of access funds, the Minister appeared not to know whether anything could be done about them.

Mr. Forth: The hon. Member for Bath (Mr. Foster) is exhibiting the charming naivety of those who have been in the political wilderness for many decades, but I do not hold that against him. The hon. Gentleman should think for a moment about the points he has made rather quickly. I replied to the questions by saying that they could be taken account of only against a background of the Government either redistributing the existing amount of money available in higher education or finding more. Before the hon. Gentleman says that his party would find more money for education generally—as I suspect he will in response to that point—will he tell us the amounts of money that he would allocate to pre-fives, higher education, school buildings and other matters, rather than skating over that as he usually does?

Mr. Foster: The Minister is right to say that he raised that particular point. My point about the Minister's response to his hon. Friends' questions is that in most cases he said that he did not know the answer and would have to take advice. He said that he would tell us later in the debate. A Minister who comes to the Dispatch Box without knowing whether his Bill will help or not help students studying part time or students who are

intercalating has real problems with his Bill. I look forward to hearing his reply. I hope that people in the Box are preparing responses for him.
The Minister asks for a detailed breakdown of the finances of our proposals to provide more money for higher education. I am sure that you would rule me out of order, Mr. Deputy Speaker, if I went into detail. In fairness to the Minister, I promise that the detailed document that has been prepared will be in the post to him tomorrow morning for him to study. I also promise to send him, before he asks for it, a copy of our detailed consultation document on the future of higher education and how we would go about dealing with the. very problems that we are discussing tonight. Both documents will be in the post to the Minister tomorrow, so he does not have to ask that additional question.

Mr. Forth: Along with the cheque.

Mr. Foster: We will explain where the finance will come from. I shall return to whether the Minister can say where the cheque will come from at the end of my speech.
The problems that are not dealt with by the Bill lie in the current system of support that is on offer. All that the Bill does is transfer the same flawed system into the private sector. No one can deny that the Student Loans Company has had its problems in recent times. Those problems have been referred to by hon. Members on both sides of the House. Reference has been made to the National Audit Office report. I will not repeat those points, but it is worth reflecting that even the Student Loans Company's own annual report published last week acknowledged what it described as unacceptable deficiencies in performance. Like the hon. Member for Eastwood (Mr. Stewart), I acknowledge that the company is now making an effort to resolve those difficulties. It is worth reflecting on what the acting chief executive has said about the Government's proposals. He has suggested that if the proposals go ahead, they will create further problems for the Student Loans Company. He fears that its unit costs will rise and that the company will end up playing the role of safety net for the banks.
It is perhaps also worth reflecting that the Committee of Vice-Chancellors and Principals, which incidentally was not consulted about the proposals, is worried about simply transferring the current system to the private sector. While there are flaws in the mechanics of the current system, there are also flaws in the underlying principles. Those flaws will continue under the proposals.
The current approach to student support is neither equitable nor secure. To gain the confidence of all involved, a system of loans must be fair to the borrowers and secure for lenders. If the proposals had met those requirements, I might have had greater sympathy with them. Equity and security could have been achieved, for example, by basing repayments more closely on the ability to pay, using the national insurance system as the basis for collection. I am sure that the Minister will acknowledge that repayment through national insurance would have the lowest default rate of all repayment systems, even for the self-employed. Therefore, I am sure that the House would be interested to hear from the Minister whether, in developing the proposals, his Department asked the Contributions Agency to assess the feasibility and cost of using national insurance for collecting student loans for both the Student Loans


Company and the envisaged private sector schemes. If it did, what costs were quoted in cash terms and as a percentage of the total cost of running the social security deductions scheme?
In view of the problems with equity and security, it is hardly surprising that banks and building societies showed reluctance the last time that they were invited to join in such a scheme. Therefore, I shall be surprised if many are interested this time round.
The Government got the students loans system wrong last time. They are getting it wrong again. If we agree to the Bill, we agree to ignore the problems of student hardship and the huge deficiencies in the current scheme. The Government have not even worked out the details of their proposals. They have no idea who within the private sector will come forward and how much they will demand. So we are being asked to write a blank cheque for the Secretary of State.
The hon. Member for Eastwood described the Bill as modest. He was right. It has much to be modest about. It certainly does not deserve a Second Reading.

Mr. Jon Owen Jones: I shall follow the hon. Member for Bath (Mr. Foster) in arguing that the greatest difficulty with the Bill is that it does nothing to deal with the problems of the current student loans scheme. It will do nothing but exacerbate the problems of real student hardship.
I am privileged to be the Member of Parliament for Cardiff, Central, the constituency in which Cardiff university is based. In the past few years it has expanded the number of its students to about 13,500, the majority of whom live in my constituency. I believe that that gives me the honour and privilege of representing more students than any other Member of Parliament.
The increase in student numbers in the university that I represent, and in others throughout the country, has been general during the past decade. I acknowledge that the vast increase in student numbers means that we must reconsider the way in which we fund higher education. It is no longer practical to fund students in the same way as they were funded a decade ago, or even two decades ago when I was a student. However, the current arrangements place thousands of young, and sometimes not so young, people in real hardship. The value of their grants declined by 24 per cent. in the 1980s and now reaches only 18 per cent. of average earnings.
Not satisfied with reneging on their promise to freeze the grant until loans were at a comparable rate, the Government began in 1993 the process of cutting grants by 10 per cent. a year each year and projected on to the next year, until the loan levels reached the same as grant levels. The Bill does nothing to tackle existing problems. Student hardship is widespread. Drop-out rates are increasing and student indebtedness to friends, family and banks is at an all-time high.
The situation for mature students is particularly bad. They often have extensive financial responsibilities to their families. They often have mortgages and so on. They found student finances hard enough without the Treasury-led cut in the mature students allowance introduced this year. Well above half of full-time students

have to get a job in term time to supplement their income. There is strong evidence that the extra demands on their time impact on their studies.
In the long summer holiday, students have no grant to cover them, but they no longer have the traditional safety net of benefits. They have to struggle through the vacation and try to get a job in the season when the market is flooded with school leavers also looking for jobs.
Last year we saw a fiasco when the Student Loans Company tried to introduce a fast-track renewal system for repeat loans. The forms were sent to students' term-time addresses over the summer. Of course, students move house every year. Most of them go home for the summer.
The result was absolute chaos, with only 19 per cent. of the applications sent out being processed by the start of term. Thousands of students were left without their loans and several who had still not managed to get their grant by Christmas came to my surgery. Because of the number of students involved and the limited number of telephone lines, it was nigh on impossible for anyone to get through, including the students union welfare officers who were trying to help. I got through and sorted out some of the cases only because I managed to find an internal number.
The Committee of Vice-Chancellors and Principals noted that about 40,000 students left their courses during 1992–93, which is a rise of 25 per cent. over the previous year. Some may return later, but that represents a 5 per cent. drop-out rate in the total student population. Although 15,000 may have left for academic reasons, 25,000 left for other reasons—a growth of 30 per cent. in one year, which is twice the rate of growth in student numbers. Although there cannot be any accurate data to calculate what percentage was due to financial hardship, anecdotal evidence strongly suggests that financial difficulties are responsible for much of that increase.
Many students turn to part-time work to see them through. In Cardiff, students run job clubs, which help to get students through when they cannot afford to do it any other way. I am sure that that work interferes with their studies. We have heard of students who have to work night shifts to get through. Even the Government party admits that the loans scheme is not working. In one document, it was suggested that the current loans scheme is highly inefficient, unlikely ever to recover its original investment and in danger of collapse.
Perhaps it is with that in mind that the Government have introduced their latest idea and intend to run down the loans company and get the banks to take over completely. Making graduates pay back loans over a fixed five-year period when they start to earn 85 per cent. of average earnings is extremely problematic and acts as a disincentive for students to take up the loans, hence the low take-up in the first few years of operation. Present take-up is much higher, but that is an indication of necessity and desperation on the part of students.
The organisation of the loans company has been appalling. Last year, it was a total shambles. So much so, that the chief executive was sacked in March. Eight months later, however, a new chief executive has not been appointed, although I believe that an appointment is imminent.

Mr. Forth: indicated assent.

Mr. Jones: I am glad that that is the case.
The great concern about these proposals is that they would create a two-tier system, with the banks creaming off the good prospects and others having lesser access to funds.
The Government's attitude to student funding is certainly questionable, as has been shown by a Tory think-tank document featured in The Times Higher Education Supplement a few weeks ago, which the Secretary of State was said to be considering. It stated:
Student numbers should be free to find their own levels with students making more rational choices about the benefits of higher education, as they bear a greater proportion of the cost.
That statement is not about choice, but about voluntary selection on the basis of wealth.
We oppose the Bill and will vote against it because it makes no provision for measures to improve access to higher or further education. It does not help to secure greater social equity in participation or alleviate student hardship. The present student loans scheme is inefficient and places graduates under a considerable burden of repayment at the start of their careers. Those flaws will be maintained under the provisions of the Bill, which is divisive and ill considered.
I hope that hon. Members on both sides of the House will consider the chaos of the present system and realise that, as the hon. Member for Eastwood (Mr. Stewart) said, this Bill is very modest. It will do nothing to answer the serious hardship that exists.

Mr. Gyles Brandreth: The hon. Member for Cardiff, Central (Mr. Jones) was long on criticism, but short on any prescription for what he and his colleagues would suggest to replace the student loans scheme, which they apparently find so unsatisfactory.
In my brief contribution I want to welcome this brief Bill, which seems straightforward, sensible and simply designed to enable students to take out private subsidised loans from banks and building societies as an alternative to public loans from the Student Loans Company.
Most, if not all, subsidised loans could and should eventually come from the private sector, but the choice should rest with the student. Personal lending is not one of the tasks that should fall naturally to the state. We are talking about a huge capital investment and I hope that it is one which, in due course, can be largely taken over by the private sector.
We have touched on the difficulties that faced the Student Loans Company in its early years. I was interested and reassured to hear of the improvement in its operation more recently. Long may that continue.
Thanks to the Bill, I trust that we shall be able to give students the opportunity to go for a private sector loan. I hope that they will be able to choose from a variety of different types that will be offered by different institutions.
Lending is not naturally an activity that belongs to Government. We must bear it in mind that the huge capital investment of which we are talking will be about £5 billion by 2000. The Opposition must deal with that and come up with some positive suggestions.
Through private sector lenders, students will have more choice and can only benefit from that. I was particularly interested in the contribution to the debate made by my hon. Friend the Member for Wantage (Mr. Jackson) about the balance between the private and the state sectors in the management of universities. Much of what he said is worth taking very seriously indeed.
Despite the opposition, no evidence has been put forward to suggest that the introduction of student loans five years ago has deterred students from going on to higher education. On the contrary, the numbers are higher than ever before. I think that I am right in saying that the Minister referred to the fact that one in three young people are now entering higher education, compared with one in eight 15 years ago. There are 1 million students on full-time higher education courses. Many of the most fortunate, of course, are at Chester college in my constituency.
I should be grateful if my hon. Friend the Minister could confirm the figure that I quoted in an intervention on the Opposition spokesman, the hon. Member for Oldham, Central and Royton (Mr. Davies). I suggested that, contrary to the talk of cuts—the mantra of Opposition Members—public funding for English universities is at record levels. I quoted a figure of about £4.7 billion for the coming year. I think that I am right in saying that another £1.5 billion is available for student support.
When my hon. Friend replies to the debate, will he also confirm that, when the maintenance grant was first introduced more than 30 years ago, it was envisaged that no more than about 170,000 students would receive it? By the end of the 1980s, 400,000 students were receiving mandatory awards. The cost to the taxpayer in real terms has increased over that period by about 250 per cent. There has been a massive expansion in higher education and a massive extra commitment by the taxpayer.
The Government were wise in 1990 to introduce the new system of student support involving loans, which has several advantages. While easing the financial burden on taxpayers and parents, it allows the Government, on behalf of the taxpayer, to use the extra resources made available by the introduction of the loan scheme to fund more places. It makes more money available for students.
Loans also encourage students to spend their resources responsibly. That is a delicate area to wander into if, like me, one has three children of college or university age. They rather pull faces when I say that it is important to learn to use one's resources responsibly. I know that it is controversial, but I believe that learning about responsible financial management should be a key element in a student's life. I should like more to be done at school, and certainly at university, to encourage young people's understanding of financial management
I was struck by a recent lecture given by Jon Westling, the president elect of Boston university in Massachusetts. In his lecture, Mr. Westling talked about a range of forms of political correctness that are creeping into American academe. He highlighted a student who had sent him a letter saying that she was concerned because she was having difficulty
in the area of auditory processing".
This young lady, who is called Samantha, warned him that she might fall asleep in his classes and that he should be prepared to fill her in on any material that she missed


while she was dozing. He explained that she had suggested that seriously. He answered that students must learn to overcome some of the challenges that face them. He ended his speech with a rousing cry that I take quite seriously. He said:
We need to return to students—and to all the members of our societies—the thrilling sense that they are responsible for their own lives.
That is part and parcel of making students and young people realise that there is a price to be paid for a quality education and that that price has to be paid by active citizens. That is one of the incidental reasons why I welcome the measure.
Of course, I am concerned when there is real hardship, but I do not believe that there is any solid evidence that less well-off students are being deterred from entering higher education by student loans. The hon. Member for Oldham, Central and Royton peddled that line again and when I questioned it, he did not have much to say, except to acknowledge that I was right that the evidence suggests that the proportion of students from social grades A and B has fallen since the introduction of student loans, while there has been a corresponding rise in the proportion of students from C1, C2, D and E backgrounds. It was extraordinary that he referred to that as differences at the margins. I suppose that the Opposition do not take seriously the notion of making education—and quality education at that—accessible to all.
I think I am right that 18 out of the 24 Labour Front-Bench spokesmen were offered their education at grant-maintained, grammar or public schools.

Mr. Gunnell: Will the hon. Gentleman give way?

Mr. Brandreth: I will when I have finished this flourish. Given that they are people who have climbed the ladder of opportunity and are ready to kick it away so that others cannot benefit from it, I am not surprised at their line on student loans.

Mr. Gunnell: The hon. Gentleman talks about the marginal differences mentioned by Labour Members. In considering the figures for social classes, should he not look at the difference that remains between people in social classes A and B, who have access to higher education, and those in social classes D and E? When we talk about differences at the margins, we are talking about eroding the very large gap that currently exists.

Mr. Brandreth: I want more students, from an ever-broader base, to take part in further and higher education. We can agree on that. I salute the fact that my hon. Friend the Minister and his colleagues are coming up with practical suggestions to deal with the real situation.
It is appalling that the Opposition have had an opportunity today to make some alternative suggestions, but have offered us nothing at all. It is not clear where the Opposition stand. I know that three years ago, at the time of the previous general election, the Labour party was quite clear that it would replace the student loans scheme with a new system for student grants and would offer targeted help for housing and for students during vacations. That was three years ago. I imagine that that commitment has fallen by the wayside.
A year ago, the hon. Member for Sheffield, Brightside (Mr. Blunkett), in an interview in Education Magazine, stated:
student debt…needs sorting out
and suggested:
Imagination will be needed to find the best way through.
A year later, his imagination has been at work and it appears that he and his colleagues have not found a way through, unless they are still toying with the idea—certainly they were in the past year—of some form of graduate tax. I know that the hon. Member for Brightside has said that he is
interested in a tax related to income which is progressive
and that he is exploring it. Perhaps the time for imagination and exploration has ended. If we are to ask people to make a choice in an election in the next 18 months or so, students will want to know exactly where they stand. At the moment, they do not.
Students know where they stand with regard to the Liberals and all credit to them for explaining that they are not in favour of the loans scheme. Their penny on income tax is being stretched ever further, rather like the Labour party's windfall tax. We have an idea of the policy of the Liberal party. It adds up and I look forward to getting the document in the post. We do not know what the Opposition's policies are, so they cannot add up. We know exactly what my hon. Friend the Minister and his colleagues have in mind. The Bill seems to me sane, sensible and concise and I welcome it.

Mr. Cynog Dafis: It would be remiss of me not to speak in this debate because I have two universities in my constituency. It would also be remiss of me if I did not emphasise the crucial issue of the severe predicament of students from low-income, unprivileged backgrounds, which has already been mentioned but about which I want to be specific.
Such students from unprivileged, working-class backgrounds were the sort of students whom the University college of Wales in Aberystwyth was set up to serve. It was a college established largely with small, individual contributions from working-class communities. It is for just that category of student that the university was set up, and those students are now subject to severe pressures. Such students are subjected to those pressures because of the reduction in grant, the introduction of a loan system that requires repayment in the first five years of employment and because of their inability to call upon support from their families.
The maximum total income available to a student from both grant and loan amounts to only £3,270. In Aberystwyth, up to £1,753 per annum goes on accommodation fees. That means that about 44 per cent. of students' income goes on accommodation compared with the average citizen's expenditure on accommodation of only 33 per cent. Most of the grant goes on paying for accommodation.
If parents, as many do and as I did for my children, pay for students' accommodation and provide an allowance for them—and there are many students in that situation—there is no problem. Those students are able to live a reasonably comfortable life and get on with their studies without much difficulty. Such students, as has been


emphasised, are able to obtain loans with equanimity. They can do that without having to worry about it, but for those who are not so privileged, the situation is really desperate, especially as such people are deeply anxious about taking up loans in any case.
I have spoken today not only to the welfare officer of the university at Aberystwyth, but to Ann Rhys, a consultant psychiatrist seconded to the university from the Ceredigion and Mid-Wales NHS trust for 50 per cent. of her time. The evidence that she has given to me is eloquent about the painful reality experienced by unprivileged students.
Over the past four years—she stipulated in her conversations with me that it was the past four years—Ann Rhys has noticed a great increase in the incidence of stress disorders. She listed them to me: eating disorders; panic attacks; serious anxiety symptoms; self-abusive disorders; and what she called secondary depressive illnesses. She emphasised that she was talking not about some kind of superficial psychological difficulty but about deep psychiatric illness, which was becoming much more common. As a member of a students health association, she told me that that was happening throughout the United Kingdom. That well-known fact has already been mentioned.
Ann Rhys had no doubt that all those problems were linked to the financial position of students and that that was the primary cause. In that regard, anxiety about debt is crucial. Many of those students come from families where borrowing is not part of the social culture. If borrowing occurs, it is seen as a sign that people are getting into financial difficulty. Ann Rhys finds in her conversations with students that they experience a great deal of anxiety about their parents. Many of them come from a home where the father is unemployed and the mother is overburdened by low-paid employment, as happens in many south Wales valley communities. She may have not one job but a number of part-time jobs. The option not available to such students is to ask for support from their families. Indeed, they are the kind of people who even avoid sharing the anxiety with their parents because they recognise that their parents, too, suffer from anxiety and face financial difficulties.
The majority of those students take part-time employment. They work in supermarkets or bars, often for less than £3 an hour. They work long hours, which leads to fatigue. Other hon. Members have mentioned students who work night shifts. Many of those students often work late at night. Ann Rhys pointed out that, as well as fatigue, those students suffer further anxiety because they find it more difficult to cope with their essays and the tasks set for them, and they become anxious about falling behind with their studies. She tells them that they should not go to work as they are not well enough and it is too much for them. Sadly, they are not in a position to choose. Although work exacerbates the psychiatric disorders from which they suffer, they have no choice: if they do not work, they will get deeper into debt.
Ann Rhys sometimes refers students to the psychology unit at Bronglais hospital, but the waiting list there is increasing. The waiting time is now some six to eight weeks. She claims that the length of that waiting list is, to a degree, the outcome of that very phenomenon. Thus the hospital system finds it increasingly difficult to cope,

and the hospital has now devised opportunities for group therapy rather than individual consultation and treatment for those various disorders.
Those problems are bound to be a disincentive for people from working-class and less privileged backgrounds to take up higher education. If that fact has not yet begun to feed through into the statistics, it will soon do so. We heard this evening that the proportion of higher education students from the working class or social classes C and D has increased. That merits some investigation and analysis, but it is clear that a range of factors may cause such an increase, such as changes in the pattern of employment, or the reduced availability of employment in many working-class areas and therefore an aspiration to seek better occupational opportunities through higher education, which is often bitterly disappointed.
There is bound to be a disincentive, which will become increasingly evident if the picture that I am describing is true. It is small wonder that Aberystwyth university has a drop-out rate of 13 per cent. That is particularly high, which probably relates to the fact that Aberystwyth is a small town, and a huge majority of the students come from far away and a small proportion live locally. I am told that that leads to a loss of fees of some £250,000 and it can lead to reduced funding from the Higher Education Funding Council for Wales which, like all funding councils, emphasises the outcome in determining the amount of funding.
My main concern tonight, however, is the misery imposed on that category of student and the injustice perpetrated. It is particularly ironic in relation to Aberystwyth, and it must be tackled. It is unlikely to be tackled, however, when the conventional wisdom these days, as we have heard more than once tonight, is obsessed with reducing public expenditure. I do not share that obsession.
I support the demand, which comes from various directions, for an urgent and thorough review of the funding of students in higher and further education. That, rather than the privatisation of student loans, should be the priority.

Mr. Mike Hall: I oppose Second Reading because, if enacted, the Bill will do nothing to improve the financial resources available to students in higher education. The Minister has confirmed that in his speech this afternoon.
It is a great pleasure to follow in this debate the hon. Member for City of Chester (Mr. Brandreth), who gave us a lecture on financial probity. Given that his track record in business is one of bankruptcy and of a business collapse, taking with it huge amounts of taxpayers' money, it was an extremely interesting lecture.
Before I explain why I oppose Second Reading, I should be grateful for a little leeway briefly to mention the results of the first opt-out ballot to take place in my constituency. Lymm high school is a successful school. Its pupils achieve excellent results, it has great facilities and its future is very secure. Over the past month or so, the parents of pupils at Lymm high school were balloted on whether they wanted to opt out of the local authority. The Minister will be delighted to know the result: 322


parents voted in favour of opting out; and 1,293 voted against. That was an emphatic rejection of opting out and an overwhelming endorsement of staying in the family of local education provision. I congratulate the parents of pupils at Lymm high school on their common sense. I thank you for your indulgence, Mr. Deputy Speaker, in allowing me to say that.
The arguments in favour of a Second Reading of the Bill are a repetition of those expressed on 5 December 1989, when the Second Reading of the current Act was debated in the House. The then Secretary of State for Education told the House that the Education (Student Loans) Bill was a scheme that would "benefit students". Some 435,000 ex-students have now had the benefit of a student loan debt: 187,000 of those have deferred the starting date of repayments and 44,000 are already in arrears on their repayments. Some £1.3 billion is now owed to the Student Loans Company and 147,459 graduates now owe £36.1 million; 11,296 students are in default as of 31 March 1995, which is 7.7 per cent. of the total.
That puts into perspective the comments of the then Secretary of State for Education and Science, the right hon. Member for South Norfolk (Mr. MacGregor), when he said that student loans were
intended to reduce students' sense of dependency on the state and promote an awareness of self-reliance and investing in their future".
The effect of the student loan scheme has been to transfer a considerable part of higher education costs from the Department for Education and Employment to individual students. The effect of Tory education policy has been to turn our undergraduates into debt carriers throughout their university careers and early into their years of employment.
When the student loan scheme was introduced in 1989, the House was informed that loans would top up the maintenance grant paid to students. Evidence now shows that those loans will soon supersede the maintenance grant as the main part of student funding. So much for top-up loans and the concept of loans designed to assist students during their time in higher education.
What is the purpose of the Bill? In 1989, the Government wanted to involve the high street banks in the loan scheme and the then Secretary of State for Education stated:
all we have asked the banks to do is to assist in the administration, on a contractual basis. We have done so for two good reasons. Those banks have the branch network and experience of lending … Our aim is to ensure that the scheme is likely to be underpinned by a broadly based network of institutions, the services of which will be available to students. That will also be to the benefit of students."— [Official Report, 5 December 1989; Vol. 163, c. 175, 182–83.]
Unfortunately, the Secretary of State then had to inform the House that Lloyds bank, and five other high street banks, had pulled out of the scheme.
During the Second Reading of the Education (Student Loans) Bill in the other place, Lord Caithness said:
We saw some advantages in making the expertise and the branch network of banks available to help with administration of the scheme; but the banks decided that there was no commercial benefit for them."—[Official Report, House of Lords, 27 February 1990; Vol. 516, c. 604.]
Those words will come back to haunt the current Minister as he seeks to introduce the new scheme. On 17 November, the Minister issued a press release in which he said:
The expertise and experience of the private sector would mean a better loans system overall and a better deal for students.

He almost repeated the argument used in 1989.
I intervened in the Minister's speech to ask what had changed. Why are the Government now trying to resurrect a failed policy of six years ago? They are like dogs returning to their vomit, and they should avoid that at all costs.
Six years ago, the Government promised to cover the loss of interest payments, pay administration costs and cover default costs, but still the high street banks did not feel able to participate, because the scheme did not suit their commercial interests. If the high street banks are now interested in such a scheme, they must have been offered a better deal. How much more money—additional sweeteners—will the Government throw at the banks to resolve the problem?
A spokesperson for Midland bank recently said of the Bill's proposals:
This is a high risk venture and we see considerable problems in managing this book. It is not the most attractive proposition in the world.
Sir Eric Ash—perhaps the Minister will tell us whether he is to be appointed as the chief executive of the Student Loans Company—has been consulted on the Bill's proposals and has said:
The message I'm getting back from the banks that I've spoken to already … is that they're not really very interested.
The explanatory and financial memorandum to the Bill notes that the extent of any overall reductions in public expenditure depends on the precise arrangements that are made with the financial institutions and the number of students who take up loans with the private sector.
The Minister must tell us how much more money and additional sweeteners the Government will offer to attract high street banks into the student loan business. The answer to that fundamental question underlines the purpose of the Bill. How much money will the Government pay to make the student loans scheme attractive to the high street banks when those banks refused to participate six years ago, despite all the guarantees offered to them? The Minister may want to intervene to answer that question, because it has been estimated that it will cost an extra £1,500 per student loan to attract the high street banks. I notice that the Minister has not got up to deny that figure at the Dispatch Box.
If the Government are prepared to spend resources on subsidising the high street banks, that money would be better spent on improving current student grants. If the Government can afford to pay £1,500 to subsidise the loans offered by high street banks, they can afford to give that money to the students direct. Instead, the Government have come up with a plan that involves the high street banks taking all the profits while the Government shoulder all the risks and the costs. The Government must consider seriously the ethics of using public money to subsidise private money lending.
What has the Minister got to say about the ethics of using taxpayers' money to bankroll high street banks? While he contemplates that question, he may be interested to hear what Lord Beloff said during the debate on the Loyal Address in 1989. On the specific issue of student loans he said:
I warned the Government that if they were trying to act through a consortium of banks, they would find the banks very reluctant to co-operate. That has been borne out by their experience. After all, a fishmonger sells fish; that is his business. A banker lends money;


that is his business. One does not have to bribe a fishmonger to sell fish but apparently the Government have to bribe the banks to lend money. Could we get further into absurdity?"—[Official Report, House of Lords, 23 November 1989; Vol. 513, c. 186–87.]
The extra cost involved in getting the high street banks to participate in the student loans scheme is yet another example of where the Government are prepared to spend more and more money on administration and bureaucracy to feed their ideologically motivated policies.
The Government have asked the House to give the Bill a Second Reading, but they have not consulted on the issues involved. They have not offered the House any costings of the new scheme, and therefore they are asking the House for a blank cheque. The House must resist those moves.
The Government have also tried to seduce the House with arguments about choice. The Minister has claimed:
Students can only benefit from the choice, diversity and competition that these changes would bring.
He has also said:
Private loans would be available from the beginning of the 1996/97 academic year. In due course we would expect most loans to be private ones.
The Government claim that the Bill will widen the choice available to students by giving them an option of where they get their loans from. In the same breath, they tell us that, eventually, they want all loans to be provided by the private sector. In his press release, however, the Minister made it clear that the value of the loan, whether provided by the Student Loans Company or the private sector, will be exactly the same. It is therefore clear that there will be no choice and no incentive provided to students to opt for loans. That reveals, once again, the gap between the rhetoric and the practice of the Government.
It is most deceitful for the Government to talk about extending choice when it is plain to everyone that the Government want to transfer loans to the private sector. The Government will simply end up creating a two-tier system of student loans, providing the banks receive a big enough bribe. That will happen despite the Government's promise, given on Second Reading of the pervious Education (Student Loans) Bill, that
students will not be excluded on the basis of their financial record and there will be no means-testing."—[Official Report, 5 December 1989; Vol. 163, c. 178.]
It is clear that the Bill gives discretion to the banks to give loans to whomever they want. The problems that that will cause have already been outlined by my hon. Friends.
The introduction of the Bill signals the Government's intention to force more and more students to take up loans from the private sector. The Bill shows the way forward for the Government to pay huge amounts of taxpayers' money to the high street banks. It shows the way to force more and more students into debt during their years of higher education and early years of employment.
The Bill is ideologically motivated through and through, and does not address the problems facing either undergraduates or the Student Loans Company. It will do nothing to encourage students from less well-off backgrounds to enter education. It does not deserve to receive a Second Reading.

Mr. John Gunnell: If evidence were needed that the Government have run out of steam and ideas, and are out of touch with what the British people need, it is provided by the Bill.
We are discussing the Bill on one of the first legislative days of the new Session, during which the Conservative Government will, presumably, suggest to the electorate that they should be re-elected to power and should continue in office. All the Government have so far offered to attract the electorate is a mechanism for shifting the responsibility for the failing system of student loans to the private sector. The nature of the Bill is demonstrated by the number of Conservative Members who are present to defend it, let alone to speak about it. They do not want to speak to it because there is little to say.
The Minister made no real case for the Bill, and it was left to the hon. Member for Wantage (Mr. Jackson) to make out a case for it. Unfortunately, his argument about the Bill was not in the Minister's speech because the Minister did not agree with it. The Minister did not share the hon. Gentleman's vision of universities as independent institutions, which would be freed up by the private sector and by the way in which those loans would be offered. Indeed, I am sure that the way in which the system has been structured makes it impossible for the hon. Gentleman's vision to become reality.
This is an unworthy start to a year in which, if the Bill before us is typical, unwanted legislation will be introduced. The Bill is largely irrelevant to higher education and is of no interest to private sector financial services companies. My hon. Friend the Member for Warrington, South (Mr. Hall) has just said that, as the financial services companies were not interested previously, if they are interested now, they must be interested only because of the bribes that are not made explicit in the Bill but are implied by it.
The Bill is of no interest to students; it is an attempt to pass the buck. It is uncosted and unwanted. As many hon. Members have said, the Bill has been introduced solely as a result of the effect that the student loans scheme has had on the public sector borrowing requirement. The Bill is an attempt to transfer as much as possible of that responsibility in the year to come.
We must ask who has demanded the change that the Bill will bring about. Has it been suggested by current recipients of loans? Have the universities asked for it? They have not asked for it, and they say that they are not interested in it and do not believe that it is the way to proceed. Have the banks suggested it? Have the building societies, with their increase in powers and their acquisition of banking powers, asked for such a scheme to be introduced? The answer to each of those questions is no. The reaction of the people who are most involved is, at best, apathetic and, at worst, hostile.
The change does not appear to be wanted by anyone except the Conservative party, and the Minister made out a very poor case for it. He spoke about the fact that it would encourage partnerships between universities and the private sector, but the way in which the tendering process has been set up means that that will not happen. No relationship will be set up between a bank and an individual university institution.
The other case that the Minister made out for the Bill was that, as the banks have branches in every high street, it will be easier for students to use the system. An entire piece of legislation is introduced because high street banks are in range of universities and can do dealings with them easily. That is not a sufficient reason for legislation that is a mechanism for debt transfer. It will not make any difference to our higher education system. The Bill has an especially empty ring because higher education is important to the nation. Other hon. Members, such as my hon. Friend the Member for West Lancashire (Mr. Pickthall), have said what the priorities should be.
Higher education fails many students at present. The hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) clearly demonstrated that access to university continues to be determined in good measure by wealth and social background, and that those people who have the least access to resources are especially likely to be affected by the Bill.
It is wrong for the hon. Member for City of Chester (Mr. Brandreth) to suggest that that is not so, and it is a misuse of the statistics, which continue to show that access to university depends on social background, however people—especially the Labour party when in power—have tried to erode that relationship. However, other work must be undertaken, and obviously it is not the measure before us.
We know that a great gap confronts those who have been in employment and want to return to further study. The Bill is not designed to help them. The argument that the Bill does not do what it was intended to do might be regarded as a poor criticism, but we must consider the plight of many mature students nowadays. As a result of the loss of the older students allowance, there is a widespread feeling that it has become a significant hardship for people who are in one career to pursue the means to enter an alternative career.
As other hon. Members have said, and as I experienced when teaching in university, mature students have a dedication to their task—a dedication that is often very heartening to teachers—and they turn in extremely good performances. It is especially disappointing that the Bill does nothing for those aspects of real need.
There can be few hon. Members who have not been asked to help in appeals for discretionary awards. During the current year especially, and in recent years, there has been a continual decrease in the amounts of money available for discretionary awards. In entire subject areas, it is almost impossible to obtain any grant for training. For instance, it has been said several times in the House that it is impossible to obtain a grant for the dance training that is available to people who have sufficient resources. The Bill does nothing for the range of students who are handicapped by the virtual disappearance of the discretionary grant scheme.
On the tendering process in the Bill, we should persuade the Minister to tell us more about the criteria on which he will award the contracts to four financial institutions in each region. We have said that it is unlikely that any institution will be enthusiastic about winning the contracts that go with the scheme. To ensure genuine competition, the tendering process must cause people to be anxious to bid and to win the contract. Banks and building societies have demonstrated no interest in the

scheme, so the likelihood of the Minister being able to choose between a series of institutions that have made competitive bids is minimal. There will be no loss leaders.
One institution will have responsibility for the loans in England and Wales, another in Scotland and another in Northern Ireland. In those circumstances, the relationship is not with the university but with the person who takes out the loan. Therefore, partnership arrangements similar to those that exist in the United States of America will not develop in the United Kingdom as a result of the measure.
The partnership arrangements in the USA exist because there is a plethora of universities—public and private—and many universities have direct links with a specific institution. Those arrangements work well in places such as Stanford university, California, and the Massachusetts Institute of Technology, where various successful companies are involved and strong relationships have developed.
However, similar arrangements will not develop as a result of the scheme proposed in the Bill. If it comes about, the scheme will be composed of arrangements between banks and a mass of borrowers. However, for the reasons given by my hon. Friend the Member for Warrington, South, obviously the enthusiasm does not exist to create a competitive position. That will lead to special hardship for those students who are least well off.
Let us consider the table that was recently supplied in the annual report of the Student Loans Company. It is interesting to note that the proportion of students deferring was 43 per cent. in the first year, 54 per cent. in the second year and 60 per cent. in the third year for which they should be making payments. Deferments will be considerable, and banks will be reluctant to take on such a scale of debt.
In returning to the issue, why have the Government not noted the fact—made clear in his memoirs—that if Kenneth Baker had known—[Interruption.] I am sorry, Mr. Deputy Speaker; I should have referred to the right hon. Member for Mole Valley (Mr. Baker), but I know that corrections are made in the record. The right hon. Member for Mole Valley made it clear that he would have persevered with a system directly involving the Inland Revenue. Why does the Minister pour scorn on the Australian system, which seems to work much better? Why do we not introduce a system aligning students' repayments with the resources available to them, enabling them to repay their loans as they progress in their careers? Given that it would involve much lower administrative costs, why do we not adopt a system that would genuinely help students?
This is a disappointing Bill, which offers nothing to the higher education system or to individual students, and which has clearly been rejected by the universities.

Mrs. Maria Fyfe: As has already been pointed out today, the subsidy from central Government to the banks that is proposed in the Bill would require £1,500 for each private loan. The Minister has not denied that. It is absurd: as I pointed out earlier, the basic grant for the next financial year will be only £1,257. We are giving more money to the banks' shareholders than to individual students. I would rather give the money to the students, and I do not think that


any Opposition Member disagrees with me. It is incredible that the basic student grant should be so low. A student living away from home, moreover, is expected to cope on a grant of £1,812, plus a maximum loan of £1,380—a total of £3,192. Only weeks ago, the House had to take action to deal with certain Members who had asked parliamentary questions. The cost of the time and trouble taken to table three such questions would have put £3,000 in a student's pocket straight away.
Earlier, I mentioned the report about student poverty in Scotland that was published in August by the Scottish citizens advice bureau. The Minister said that he had seen students in beer bars. Must every student beer bar in the country close before the Minister accepts that there is such a thing as student poverty? The report demonstrated conclusively that, for all the Government's denials, student poverty exists and, indeed, is widespread. Students who are perfectly capable of achieving their degrees and diplomas are having to give up because of mounting debts.
In Scotland, there is a four-year honours degree course, because the first year is the equivalent of an A-level course in England. That means that Scottish students experience even more debt. Students who become ill fall foul of a system that does not allow for any such human frailty: grants are refused to students who wish to repeat a year because of ill health. Students have been known to leave courses because delays in getting grant cheques to them have left them with no money to live on.
According to the report, a student in Grampian sought advice from the SCAB about bankruptcy because—as a 19-year-old first-year student—he owed a total of £2,000 to the bank, the Student Loans Company and the university for accommodation. The SCAB has observed a general increase in the number of student clients seeking debt counselling. That may not be altogether surprising, but it should shock us that the bureau has had to send students to charities that provide free food.
The fact is that students are probably the only category of people who can end up with literally no income. They have no access to emergency funds, such as a crisis loan from the social fund. Grants and loans combined amount to less than the average weekly benefit. That exerts an unacceptable pressure on young men and women. We should ease their path towards higher and further education, rather then making it an obstacle course.
Conservative Members have said much about fairness to the taxpayer. No one objects to that, but I do not think that any fair-minded taxpayer wants to be unfair to students. The amount of grant currently available to students is a disgrace in a country that claims to want to encourage young people to participate in higher and further education. I look forward to my party's introduction of a scheme that will ensure that no student in the land is deterred from entering such education because of the fear of poverty or debt.

Mr. Tony Worthington: As many hon. Members have said, this is a strange Bill. There has been no demand for it from students, universities or the Student Loans Company—or, I suspect, from the Department for Education and Employment. I do not believe that the Bill has come from that Department; I believe that it has come from the Treasury. If we could debate it on that basis—on its merits, indeed—the debate would have some reality, but the Government are afraid to admit that the Bill concerns the transfer of money from the public sector borrowing requirement.
I am told that the Bill is about choice, but none of the people I have mentioned asked for it. They exercised their choice: they did not want it. The private sector, too, has exercised its choice, saying, "We want nothing to do with the Bill." The Government have said, "We will try a little sweetener. Here is a bit more: then perhaps you will exercise your choice." Public money is involved in this public Bill, whose purpose is to subsidise the private sector so that it will enter the arena.
We are to gain the expertise of the private sector. I thought that we gained that when Mr. Ronald Harrison was appointed to run the Student Loans Company. Mr. Harrison, however, was dismissed last year, after bringing the skills and expertise of the private sector to the company, and wrecking it.
I do not share the Government's respect for the banking system—their view that expertise exists and that we are not tapping into it. If we ask which sector should now be concentrating on its proper job of investing in British industry, the answer should be the banks. If we could persuade them to do that, rather than trying to entice them into using their skills, they would be doing their job.
I find it odd that, having established the Student Loans Company a few years ago in Glasgow—the jobs in Glasgow are very welcome—the Government should seek to create unemployment in that city. As the Bill states, if it succeeds, the company in Glasgow will be scaled down, and people working there will cease to be employed. That is one of the Bill's central purposes. In a policy that no one wants, the Government are seeking to endanger 3,000 jobs.
The Minister shakes his head, but it is in the explanatory and financial memorandum:
The number of staff employed by the Student Loans Company will be reduced as a result of the Bill".
Fewer jobs will be lost if the Bill fails.

Mr. Forth: I thought that the hon. Gentleman was above the kind of irresponsible scaremongering in which he is now indulging. To the extent that loans would be provided by the banks instead of the Student Loans Company, it is self-evident that SLC staff numbers would be reduced. There can be no doubt about that. Equally, the Student Loans Company must continue to exist, as the Government have given a guarantee that we shall always provide an alternative. Is the hon. Gentleman suggesting that it is beyond the professional expertise of the management in Glasgow to administer change?

Mr. Worthington: The Minister does not contradict what I have said. Does he deny the memorandum, which says that the legislation will lead to an increase in the number of staff employed by the Department for


Education and Employment to administer the subsidies to the private sector, but to a reduction in public sector employment as fewer people will be employed by the Student Loans Company? The stated purpose of the Government's Bill is to increase the subsidy to the private sector and to run down the Student Loans Company.
Labour Members base their assertions on the evidence that they are given about student poverty. Inevitably, that is not the best-quality evidence: it tends to be anecdotal evidence from student welfare officers, for example. A defect of the Student Loans Company is that it has no responsibility for researching the consequences of its actions, and the Department for Education and Employment has also shrugged off its responsibilities in that regard. If the Government were serious about their policy, they would conduct thorough-going research into the consequences of their measures to create student support. However, the Government will not do that.
I have examined the sums of money involved. My hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) referred to the cost of a Scottish degree. I have examined the cost of taking a Scottish degree and going on to teacher training, which involves five years of study.
This year, a student loan is just less than £1,400. So the cost of becoming a teacher in a Scottish school is a minimum of £7,000—five times £1,400. Students must pay back that £7,000 over five years—which involves a weekly payment of £27—as soon as they receive a salary of £15,000 per year. It cannot be fair that, when a Scottish schoolteacher receives a salary of £15,000 and begins to settle down with a family, buy a house and establish a career, he or she must pay £27 per week in a totally inflexible manner. Is there any legislation to address that problem? No, we have only this nonsense legislation that does not tackle the basic issues.
The Bill does not address the quality of education in Northern Ireland. The Northern Ireland peace process is in a fragile state. As Northern Ireland has more students and fewer university places than anywhere else in the United Kingdom, 44 per cent. of Northern Ireland students must travel to mainland Britain to take up university education. For reasons associated with the troubles, many of those students do not return to Northern Ireland from mainland Britain.
It is a serious problem: 44 per cent. of higher education students leave the Province, and, overwhelmingly, they do not return. That is a serious educational consequence, but the Bill does not explore how more students from Northern Ireland could study in that country.
The Bill also fails to deal with the consequences of the fact that more Northern Ireland students come from poorer backgrounds—about 34 per cent. of students from Northern Ireland are from social classes D and E, compared with 29 per cent. in England and Wales. More students from Northern Ireland than anywhere else are recipients of full maintenance grants, and they also face the additional cost of travelling from Northern Ireland to the mainland.
Those are serious student maintenance issues, but the Bill does not address those problems; it simply enables public subsidy to go to private financial institutions. I charge the Government with being flippant: at a time when students face serious problems, the Government have introduced a Bill that is driven by dogma, and is irrelevant to students' needs.

Mr. Edward O'Hara: My hon. Friend the Member for Warrington, South (Mr. Hall) talked at some length about the supposed element of choice in the Bill. Let us judge the legislation by the Government's own terms: what choice does it offer? We have already exposed the concept of the choice that is offered to parents of schoolchildren: they may exercise a preference of school for their children, but they have no real choice—it is the schools that exercise choice.
Under the proposed student loans system, students may prefer to go to a finance house—perhaps because of the inducements that such an institution may offer them—to apply for a loan. However, any choice in the matter will be exercised by the finance house. It will be a case of selection according to creditworthiness. I assure hon. Members that a typical student from my constituency would have no choice at all.
We are talking about the proposed introduction of a two-tier system of student loans: those students who can do deals, and those who cannot; those who have the power, and those who do not. The supposed choice and diversity in respect of schools has led to divergence and division, and it is the same with the proposed dual-track system of student loans. Students will have no choice, and there will be no real diversity: there will be only divergence between those who will have the opportunity to pay off their loans at preferential rates when they start working, and those who will begin their working lives with fixed mortgages around their necks.
As my hon. Friends have said, the purpose of the Bill is to fiddle the public sector borrowing requirement and to massage the figures down. It is an exercise in creative accounting, and it will be achieved at a price. The basis of the Bill is flawed, and no less flawed are the procedures that the Bill allows the Secretary of State to follow in order to implement the new system by September 1996. The Bill gives extraordinary powers to the Secretary of State to incur expenditure when negotiating terms with finance houses. It literally offers a blank cheque, and that is a disgrace. It is necessary from the Government's point of view because, by presenting the proposal in this manner, they have passed the negotiating whip hand to the finance houses. They have loudly signalled their lack of interest, and their interest will be aroused at a price. That is not surprising, when one considers what the finance houses must risk: unpredictability of demand, risk of default and the loss of good will among valuable student clients.
Not only the finance houses, but the students and the Committee of Vice-Chancellors and Principals, reject the proposal. They recoup only half the cost of managing the present system, and they envisage an added administrative burden from managing a dual loans system.
In short, the Bill is not just mediocre: it is tawdry in its conception and in its purpose. It is unloved by both the agents and the clients of the proposed system. It is irrelevant, and it does nothing to address the faults of the present system of student financing, which is complex, confusing and inequitable, and the cause of much student hardship. Above all, the present scheme exposes the Government to the accusation that they are rationing higher education at a time of retrenchment, and are wasting a pool of national talent.
The system is complex and confusing because students are trapped in a maze of grant, loan, access funds, parental support and part-time employment. I know that certain Conservative Members believe that to be a good thing—a virtuous initiation of students into the realities of finance, self-reliance and responsibility. There is, however, another way of looking at it. There is good evidence that enforced preoccupation with financing their studies leads to many students worsening their academic performance because they cannot keep up with their studies, dropping out or deciding not to enter higher education in the first place.
The Government would have been far better occupied in undertaking a close analysis of the shortcomings of the present system and producing a Bill that attempted to address them instead of the tawdry measure that they present to us today, and that I hope will be rejected.

Mr. Stephen Byers: We have had an instructive and informative debate. There has been a consensus: all hon. Members recognised that, at least on public policy for student maintenance, there are no easy answers to what are difficult questions. The rest of the debate identified a gulf between the political parties on that issue.
Conservative Members believe that privatisation of the loans system will somehow, as if by magic, remedy the present weaknesses and deficiencies, whereas the Opposition regard the measure as simply tinkering with a failed and discredited system in a cynical attempt to fiddle the public sector borrowing requirement for party political purposes.
Five years ago, when the Education (Student Loans) Bill was before the House, the then Secretary of State for Education and Science, the right hon. Member for South Norfolk, (Mr. MacGregor), said that the aim of the Bill was
to share the cost of student maintenance more fairly between the taxpayer, students' parents and students themselves."—[Official Report, 5 December 1989; Vol. 163, c. 174.]
After five years of the operation of the student loans system, it has become clear that it provides little fairness for the taxpayer as £1.3 billion of public money remains outstanding on the loan account. The National Audit Office report on the operation of the Student Loans Company, published on 24 November, concluded that £142 million borrowed from the public purse would not be repaid. Where is the fairness to the taxpayer in that regime?
The 1988 White Paper that led to the introduction of the Education (Student Loans) Act 1990 stated that the spending outlay would not be recovered until the year 2015, when savings would start to be made. That calculation assumed a deferred repayment rate of between 10 and 15 per cent., but the National Audit Office calculated that at 31 March 1995, 45 per cent. of all borrowers had been granted deferment. Given that extremely high rate of deferment, when do the Government believe that net savings will accrue from the student loans system?
It is a great irony that a scheme that costs so much public money is supporting a system that is deeply unpopular with students. The take-up rate of eligible

students is running at 55 per cent. after five years of operation. That is far lower than the Government's original prediction. The loans scheme, coupled with the withdrawal of benefits and successive reductions in the value of the grant, has resulted in many students being pushed into poverty and debt.
The Minister spoke of students swilling beer in college bars—that may be true of the few students whom he meets—but many Opposition Members know that the reality is quite different. The speeches of my hon. Friends the Members for Cardiff, Central (Mr. Jones) and for Glasgow, Maryhill (Mrs. Fyfe) illustrated the nature of student poverty. According to university vice-chancellors, the main reason for the dramatic increase in the student drop-out rate is financial stress. In the latest year for which figures are available, 40,000 students dropped out of their university courses—a 25 per cent. increase on previous years. The Bill needs to be judged against that backdrop.
All those most closely connected with higher education have been strongly critical of the Government's present approach. There is a broad consensus on the need for a fundamental review of student maintenance. The president of the National Union of Students, Jim Murphy, said:
We want an urgent review of the system of student financial support and proper consultation.".
That statement was supported by the Committee of Vice-Chancellors and Principals. Its chairman, Professor Gareth Roberts, called for
a fundamental review of the funding of student maintenance".
The committee also
expressed their disappointment that the Government failed to consult them
on the proposals before the House.
The Bill seeks to allow the private sector to enter the student loans market. In considering that proposal, we must briefly consider the effectiveness and efficiency of the Student Loans Company. As my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) said, the Bill will cost jobs in Glasgow, where the unemployment rate is already well above the national average.
Hon. Members will be aware of the deficiencies of the Student Loans Company over the years, but there has been substantial improvement. The National Audit Office report concluded:
Our findings show that many initiatives are now in hand to improve performance. In particular, flaws in the Repeat Application Procedure, which caused the difficulties in 1994, were fully addressed for the re-launch of the initiative in 1995 and, as at 31 October 1995, the revised procedure was operating well. More generally, initiatives have been taken to improve the clarity of business and financial performance reporting and … the Company's performance targets have been made more rigorous and precise.
Those of us who make a habit of reading National Audit Office reports can confirm that its conclusion is a strong and positive statement of support for the conduct of the Student Loans Company.
Whatever reservations we have about the scheme, it is now clear that the Student Loans Company, in difficult circumstances, is on the right track. Much of the credit for that must go to Sir Eric Ash, who should be congratulated on the way in which he turned the company round.
Throughout the company there is clearly now a commitment to reduce costs, improve efficiency and offer a quality service in the public sector. The problems encountered by the Student Loans Company occurred because of the failings of the previous chief executive, who was recruited from the private sector, but that is the direction in which the Government now wish to proceed.
Why do the Government wish to privatise the student loans system now? When the Bill was published, the Department for Education and Employment issued a press notice stating that the Bill is
designed to allow private sector financial institutions to enter the student loans system as major players.
Yet there is little evidence—there certainly was none in the Minister's speech—of demand from the private sector to become involved in the making of loans to students.
What we now know, which we did not know before, are the terms that were available to banks in 1989 to encourage them to take part in the scheme. They were drawn up by the consultants, Price Waterhouse. At the time they were not made public because they were regarded as "commercial in confidence". Since then, and since the banks' withdrawal from the scheme, they have been published. They reveal that as part of a package of measures to encourage banks to take part, the Government said that loans would be kept off the balance sheets of participating banks, that start-up and running costs would be recouped in full from the Government—the taxpayer—and that the scheme would be funded in full by the Government, including any default liability.
That was on offer in 1989, but the banks turned their backs and walked away. What the Minister should tell the House this evening is what is on offer in 1995 to change the approach of the banks, the building societies and the credit institutions. As my hon. Friend the Member for Warrington, South (Mr. Hall) said, referring to the excellent speech by the Conservative peer Lord Beloff, if the fishmonger sells fish, that is his business; if a banker lends money, that is his business. One does not have to bribe a fishmonger to sell fish, but apparently the Government have to bribe the banks to lend money. Could there be greater absurdity? The Minister, in being honest and open with the House this evening, needs to disclose what further absurdities and what bribes will come from the Government.
The measure has little to do with tackling the problems being experienced by students and by the higher education institutions. The Government are setting up a two-tier system—not for students, but for its operators. The Student Loans Company will act as a lender of last resort, covering students who are not deemed to be desirable by the private sector. There will be no choice for students and there will be no diversity for students. The choice will rest with the private sector and the diversity will be in who runs the operation. There will be no benefit to students.
The private sector is in a favourable position, which may be the difference between now and 1989. It will have the Student Loans Company to pick up the pieces. It will be able to pick the cherries—it will offer loans only to students from suitable backgrounds who are no financial risk. If that is coupled with a subsidy from the taxpayer, the Government will hope that many banks will be prepared to say yes.
The Minister should answer the specific points made in the debate. My hon. Friend the Member for West Lancashire (Mr. Pickthall) referred to the possibility of

part-time students being covered by the loans scheme. Will that be so? The hon. Member for Lancaster (Dame E. Kellett-Bowman), in an intervention, asked whether students who interrupt their studies for a responsible reason could benefit from the scheme. We hope to have a answer from the Minister on that point. As my hon. Friend the Member for Morley and Leeds, South (Mr. Gunnell) said, we need to know what savings in the PSBR the Government expect to accrue as a result of the measures in the Bill.
The Bill is a further example of this Government's lurch to the right, which is probably why the Minister is so keen to promote it. Extreme policies are being introduced in a increasingly desperate attempt to placate the demands of the right wing, both within the Cabinet and on the Back Benches. The only beneficiaries will be the Government because the privatisation will remove billions of pounds from the PSBR and give the Chancellor further room for manoeuvre. The other beneficiaries will be the banks and finance houses, which will profit from student poverty, debt and misery.
The Bill fails the taxpayer by increasing the contribution from the public purse. It fails students by promising them more but giving them less. It fails our country in that it will not open up access to higher education. It places a mortgage on knowledge and a debt charge on learning. As a result, student poverty will increase, aspirations will be frustrated and opportunities will be denied. It represents a triumph of political dogma over reason. That is why we shall vote against Second Reading.

Mr. Forth: With the leave of the House, Mr. Deputy Speaker. I welcome the hon. Member for Wallsend (Mr. Byers) to the Dispatch Box, in his first contribution to these matters. I hope that he and I will be exchanging views for a long time to come—in our present capacities, of course.
The hon. Member for Oldham, Central and Royton (Mr. Davies) said that he thought that the chairman of the Conservative party had revealed that our legislative programme this year was designed to smoke out the Opposition. If that is true, I am afraid that the debate has failed to do anything of the sort. It became increasingly obvious throughout the debate, in all the speeches of Labour Members, that we would be told nothing about what the Labour party would do in this crucial area of policy. It is not good enough for Labour Members to make the sort of comments and accusations that they did about the Bill and higher education policy generally when they have not a single policy idea on how they would conduct such a crucial area of education.
We still do not know, even after the debate, whether the Labour party approves of loans as a matter of principle to supplement grant. We do not know whether it would continue with loans or whether it would abolish them and return to grants. We do not even know something as basic as that. We do not know in detail what it would do with a loans scheme. We do not know its attitude towards the participation of the banks. Some Labour Members seem to be afraid that the banks will participate, while others deride the scheme and allege that the banks would not touch it with a bargepole. They cannot have it both ways. They either fear that the banks will participate or they are


confident that they will not. It should be one or the other, not both. There was a very mixed message throughout the debate.
What I want to know—and I am still waiting—is whether the Labour party, as a matter of policy, would abolish loans and return to grants. What would it do about the benefits that some Labour Members say are being denied to students? Would it restore those benefits? We did not hear anything about that. We heard no undertakings about part-time and further education students, despite the fact that some Labour Members tried to make great play of the fact that some of those students were disadvantaged. Unless the Labour party is prepared to tell us what it would do, its criticism is of no import or substance. Labour Members did not say what they would do about lower-income students or alleged student poverty.
There was a hint from some Opposition Members—I think even from the hon. Member for Wallsend, and certainly from the hon. Member for Clydebank and Milngavie (Mr. Worthingon)—that they regard the Student Loans Company as a job scheme for the people employed in it. Whatever else we are doing, we certainly are not designing the Bill simply to run down the Student Loans Company as a matter of policy. I tried to explain that the Student Loans Company will continue to exist and that its existence is an integral part of the whole thrust and philosophy of the Bill. To the extent to which the opportunities open to the banks were taken up, there would have to be some reduction in the number of people employed at the Student Loans Company, but the reduction would be gradual and would take place over a period of time. It would certainly always leave the Student Loans Company as a major provider of loans to students. That has been made perfectly clear.
I think that we must conclude that Labour Members have not yet had permission from the hon. Member for Dunfermline, East (Mr. Brown) to say anything whatsoever about education policy, higher education policy, student funding or anything else of the kind. We will have to adjust their criticisms accordingly.
I should like to give credit where credit is due. The hon. Member for Wallsend said at the beginning of his speech—this gave us some idea of the problem that he and his colleagues have—that, in this sphere, there are no easy answers and a number of difficult questions. That must certainly be so because he and his colleagues have come up with no answers at all—easy or difficult.

Mr. Blunkett: When will the Minister answer some of the difficult questions that we have put to him?

Mr. Forth: I do not know what the hon. Gentleman categorises as difficult questions. Labour Members have made a number of allegations, one of which was that the drop-out rate is increasing. I know of no evidence to support that allegation because, broadly speaking, the drop-out rate, which is difficult to define satisfactorily, has remained fairly constant. It has fluctuated somewhat over a number of years but has remained fairly constant for a long time. Indeed, it is very much lower in this country than in most of the comparable countries with which we compete.
Labour Members frequently made that point. They also made allegations about student poverty. The hon. Member for Glasgow, Maryhill (Mrs. Fyfe) made that allegation on the basis of conversations that she had had with a branch of the citizens advice bureau.

Mrs. Fyfe: Will the Minister give way?

Mr. Forth: I shall give way in a moment. I yield to none in my admiration for much of the work done by many of the people who work in the citizens advice bureaux, but I do not think it is wise to generalise on the basis of a very small and self-selecting sample of students who felt unable to deal with their financial circumstances, for whatever reason, and state that somehow all students are suffering from poverty.

Mrs. Fyfe: The Minister must avoid deliberately misunderstanding what I said. The Scottish CAB produced a report in August because it was concerned about the scale of student poverty in Scotland. It was not dreaming; it was not making it up; and it was not drawing on just a few examples. Poverty was widespread enough for it to feel that it had to produce a report on it. Is the Minister accusing it of dreaming or lying?

Mr. Forth: I am accusing it of nothing; I am simply saying that the hon. Lady is generalising from a very narrow sample. I have yet to hear a policy response from the Opposition to what they believe to be the problem of student poverty. I do not accept the accusation that there is student poverty, but some Labour Members believe it exists so I am waiting for them to say what they would do about it, were they ever to form a Government.
Another source of schizophrenia among Labour Members was the Student Loans Company. I am aware of the criticisms of the company made by the National Audit Office but I am also aware of, and pay tribute to, the substantial improvements in its performance. I was happy to hear the hon. Member for Wallsend say that the Student Loans Company is now on the right track—I think that they were his words—but his colleagues do not seem aware of that fact. They seem to be stuck in the circumstances of a year ago and have completely ignored the progress that has been made. Labour Members must be clear among themselves: has the Student Loans Company made significant progress and sorted out its problems of a year ago, or are they are stuck in a groove and unable to acknowledge the company's improvements?m

Mr. Bryan Davies: The Minister will recall that one of the main points of the debate has been to ask him whether, under the Bill, there is to be any extension of the category of students who might benefit from access to loans. Particular reference was made to part-time students. He was directly asked such questions several times: will he answer them?

Mr. Forth: Yes, I shall. The Bill is not designed to alter the qualifications for or the rights to student finance. It was designed to increase the choice of sources of finance to those who currently qualify. Labour Members have made terribly heavy weather of that question and have not answered it themselves. I have made the position perfectly clear—it was not the intention behind the Bill—but I am waiting for the hon. Member for Oldham, Central and Royton or any of his colleagues to answer the question that they have asked.

Mr. Robert Jackson: I hope that my hon. Friend the Minister will in due course extend access to loans to students on part-time courses. Meanwhile, has he taken note of the fact that the Opposition regard it as a benefit that should be extended?

Mr. Forth: My hon. Friend is absolutely right. That illustrates yet again the utter confusion among Opposition Members, who have no clear policy on the matter and no conception of what to do in this sphere. That is the one thing that has been achieved in their contributions to the debate.
I pay tribute to my hon. Friend the Member for Wantage (Mr. Jackson) who has, typically, thought through these issues clearly and carefully and made his usual well-thought-out contribution to the debate. He will understand that I cannot give a detailed response to the points that he made, but I shall certainly want to examine them carefully and consider whether they can inform the development of future policy. I hope that when we produce our further consultation paper on higher education early in the new year, my hon. Friend will reply to it. I suspect, however, that he could do no better than send a copy of the well-thought-out and worthwhile speech that he made today.
I was told several times that our policy had somehow led to a reduction in the number of students from less well-off families entering higher education. That is simply not so. The latest survey information available to me suggests that while the younger students entering higher education from less well-off backgrounds were in the minority in 1988, they are in the majority now. Our figures show that the number of students from social classes 4 and 5 accepted for undergraduate courses rose by more than 50 per cent. in just three years between 1991 and 1994. Therefore, the loose accusation repeated by the Opposition—that our regime of balancing grants and loans has disadvantaged students from lower-income families—is not true. There is no evidence to support such an allegation.
The hon. Member for West Lancashire (Mr. Pickthall) asked about direct debits. I can confirm that a student who borrowed from more than one loan provider would indeed have more than one direct debit. That is logical. The banks may assign or sell on debts, and any information available on those who have taken out such loans would, as in the normal way, be made available. I cannot for the life of me see why not; it is a perfectly normal part of the general lending regime.
This debate has been about a Bill designed to broaden the choice available to students—to set them free from the current public sector monopoly provider and to introduce important choice and new players to the market. We are in the early stages of our deliberations, but eventually this enabling Bill will allow us to carry forward an important development in policy and to seek to provide a much wider choice of loans to students. It is a sensible and modest measure, thoroughly consistent with the direction of our policies in the past, and I commend it to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 285, Noes 250.

Division No. 4]
[7.59 pm


AYES


Ainsworth, Peter (East Surrey)
Evans, Jonathan (Brecon)


Aitken, Rt Hon Jonathan
Evans, Nigel (Ribble Valley)


Alexander, Richard
Evans, Roger (Monmouth)


Alison, Rt Hon Michael (Selby)
Evennett, David


Allason, Rupert (Torbay)
Faber, David


Amess, David
Fabricant, Michael


Arbuthnot, James
Fenner, Dame Peggy


Arnold, Jacques (Gravesham)
Field, Barry (Isle of Wight)


Arnold, Sir Thomas (Hazel Grv)
Forman, Nigel


Ashby, David
Forsyth, Rt Hon Michael (Stirling)


Atkins, Rt Hon Robert
Forth, Eric


Atkinson, David (Bour'mouth E)
Fowler, Rt Hon Sir Norman


Baker, Nicholas (North Dorset)
Fox, Dr Liam (Woodspring)


Baldry, Tony
Fox, Sir Marcus (Shipley)


Banks, Matthew (Southport)
Freeman, Rt Hon Roger


Banks, Robert (Harrogate)
French, Douglas


Bates, Michael
Fry, Sir Peter


Batiste, Spencer
Gale, Roger


Bellingham, Henry
Garel-Jones, Rt Hon Tristan


Bendall, Vivian
Garnier, Edward


Biffen, Rt Hon John
Gill, Christopher


Booth, Hartley
Gillan, Cheryl


Boswell, Tim
Goodson-Wickes, Dr Charles


Bottomley, Peter (Eltham)
Gorman, Mrs Teresa


Bottomley, Rt Hon Virginia
Grant, Sir A (SW Cambs)


Bowden, Sir Andrew
Greenway, Harry (Ealing N)


Bowis, John
Greenway, John (Ryedale)


Boyson, Rt Hon Sir Rhodes
Griffiths, Peter (Portsmouth, N)


Brandreth, Gyles
Grylls, Sir Michael


Brazier, Julian
Gummer, Rt Hon John Selwyn


Bright Sir Graham
Hamilton, Sir Archibald


Brooke, Rt Hon Peter
Hamilton, Neil (Tatton)


Brown, M (Brigg & Cl'thorpes)
Hampson, Dr Keith


Browning, Mrs Angela
Hannam, Sir John


Budgen, Nicholas
Hargreaves, Andrew


Butler, Peter
Harris, David


Butterfill, John
Haselhurst, Sir Alan


Carlisle, John (Luton North)
Hawkins, Nick


Carlisle, Sir Kenneth (Lincoln)
Hawksley, Warren


Carttiss, Michael
Hayes, Jerry


Cash, William
Heald, Oliver


Channon, Rt Hon Paul
Heathcoat-Amory, David


Chapman, Sir Sydney
Hendry, Charles


Churchill, Mr
Hicks, Robert


Clappison, James
Higgins, Rt Hon Sir Terence


Clark, Dr Michael (Rochford)
Hill, James (Southampton Test)


Clifton-Brown, Geoffrey
Hogg, Rt Hon Douglas (G'tham)


Coe, Sebastian
Horam, John


Colvin, Michael
Hordern, Rt Hon Sir Peter


Congdon, David
Howard, Rt Hon Michael


Coombs, Anthony (Wyre For'st)
Howell, Rt Hon David (G'dford)


Coombs, Simon (Swindon)
Hughes, Robert G (Harrow W)


Cope, Rt Hon Sir John
Hunt, Rt Hon David (Wirral W)


Cormack, Sir Patrick
Hunt, Sir John (Ravensbourne)


Couchman, James
Hunter, Andrew


Cran, James
Hurd, Rt Hon Douglas


Currie, Mrs Edwina (S D'by'ire)
Jack, Michael


Curry, David (Skipton & Ripon)
Jackson, Robert (Wantage)


Day, Stephen
Jenkin, Bernard


Deva, Nirj Joseph
Jessel, Toby


Dorrell, Rt Hon Stephen
Johnson Smith, Sir Geoffrey


Douglas-Hamilton, Lord James
Jones, Gwilym (Cardiff N)


Dover, Den
Jones, Robert B (W Hertfdshr)


Duncan, Alan
Jopling, Rt Hon Michael


Duncan-Smith, Iain
Kellett-Bowman, Dame Elaine


Dunn, Bob
Key, Robert


Durant, Sir Anthony
King, Rt Hon Tom


Dykes, Hugh
Kirkhope, Timothy


Eggar, Rt Hon Tim
Knapman, Roger


Elletson, Harold
Knight, Mrs Angela (Erewash)


Emery, Rt Hon Sir Peter
Knight, Rt Hon Greg (Derby N)


Evans, David (Welwyn Hatfield)
Knight, Dame Jill (Bir'm E'st'n)






Knox, Sir David
Sackville, Tom


Kynoch, George (Kincardine)
Sainsbury, Rt Hon Sir Timothy


Lait, Mrs Jacqui
Scott, Rt Hon Sir Nicholas


Lamont, Rt Hon Norman
Shaw, David (Dover)


Lang, Rt Hon Ian
Shaw, Sir Giles (Pudsey)


Lawrence, Sir Ivan
Shephard, Rt Hon Gillian


Legg, Barry
Shepherd, Colin (Hereford)


Leigh, Edward
Shepherd, Richard (Aldridge)


Lennox-Boyd, Sir Mark
Shersby, Sir Michael


Lester, Jim (Broxtowe)
Sims, Roger


Lidington, David
Skeet, Sir Trevor


Lightbown, Sir David
Smith, Sir Dudley (Warwick)


Lilley, Rt Hon Peter
Smith, Tim (Beaconsfield)


Lloyd, Rt Hon Sir Peter (Fareham)
Soames, Nicholas


Lord, Michael



Luff, Peter
Speed, Sir Keith


Lyell, Rt Hon Sir Nicholas
Spencer, Sir Derek


MacGregor, Rt Hon John
Spicer, Sir James (W Dorset)


MacKay, Andrew
Spicer, Michael (S Worcs)


Maclean, Rt Hon David
Spink, Dr Robert


McLoughlin, Patrick
Spring, Richard


McNair-Wilson, Sir Patrick
Sproat, Iain


Madel, Sir David
Squire, Robin (Hornchurch)


Maitland, Lady Olga
Stanley, Rt Hon Sir John


Major, Rt Hon John
Steen, Anthony


Malone, Gerald
Stern, Michael


Mans, Keith
Stewart, Allan


Marland, Paul
Streeter, Gary


Marlow, Tony
Sumberg, David


Marshall, John (Hendon S)
Sweeney, Walter


Marshall, Sir Michael (Arundel)
Sykes, John


Martin, David (Portsmouth S)
Tapsell, Sir Peter


Mates, Michael
Taylor, Ian (Esher)


Mawhinney, Rt Hon Dr Brian
Taylor, John M (Solihull)


Mellor, Rt Hon David
Taylor, Sir Teddy (Southend, E)


Merchant, Piers
Temple-Morris, Peter


Mills, Iain



Mitchell, Andrew (Gedling)
Thomason, Roy


Mitchell Sir David (NW Hants)
Thompson, Sir Donald (C'er V)


Moate, Sir Roger
Thompson, Patrick (Norwich N)


Monro, Rt Hon Sir Hector
Thornton, Sir Malcolm


Montgomery, Sir Fergus
Thurnham, Peter


Moss, Malcolm
Townend, John (Bridlington)


Neubert, Sir Michael
Townsend, Cyril D (Bexl'yh'th)


Newton, Rt Hon Tony
Tracey, Richard


Nicholson, David (Taunton)
Trend, Michael


Nicholson, Emma (Devon West)
Trotter, Neville


Norris, Steve
Twinn, Dr Ian


Onslow, Rt Hon Sir Cranley
Vaughan, Sir Gerard


Oppenheim, Phillip
Waldegrave, Rt Hon William


Ottaway, Richard
Walden, George


Page, Richard
Waller, Gary


Paice, James
Ward, John


Patnick, Sir Irvine
Wardle, Charles (Bexhill)


Patten, Rt Hon John
Waterson, Nigel


Pattie, Rt Hon Sir Geoffrey
Watts, John


Pawsey, James
Wells, Bowen


Peacock, Mrs Elizabeth



Pickles, Eric
Whitney, Ray


Porter, Barry (Wirral S)
Whittingdale, John


Porter, David (Waveney)
Widdecombe, Ann


Portillo, Rt Hon Michael
Wiggin, Sir Jerry


Rathbone, Tim
Wilkinson, John


Redwood, Rt Hon John
Willetts, David


Renton, Rt Hon Tim
Wilshire, David


Richards, Rod
Winterton, Mrs Ann (Congleton)


Riddick, Graham
Winterton, Nicholas (Macc'f'ld)


Robathan, Andrew
Wolfson, Mark


Roberts, Rt Hon Sir Wyn
Wood, Timothy


Robertson, Raymond (Ab'd'n S)
Yeo, Tim


Robinson, Mark (Somerton)



Roe, Mrs Marion (Broxbourne)
Tellers for the Ayes:


Rowe, Andrew (Mid Kent)
Mr. Derek Conway and


Rumbold, Rt Hon Dame Angela
Mr. Simon Burns.





NOES


Abbott, Ms Diane
Dunwoody, Mrs Gwyneth


Adams, Mrs Irene
Eagle, Ms Angela


Ainger, Nick
Eastham, Ken


Ainsworth, Robert (Cov'try NE)
Etherington, Bill


Allen, Graham
Evans, John (St Helens N)


Alton, David
Faulds, Andrew


Anderson, Donald (Swansea E)
Field, Frank (Birkenhead)


Anderson, Ms Janet (Ros'dale)
Flynn, Paul


Armstrong, Hilary
Foster, Rt Hon Derek


Ashdown, Rt Hon Paddy
Foster, Don (Bath)


Ashton, Joe
Fyfe, Maria


Austin-Walker, John
Galbraith, Sam


Barnes, Harry
Galloway, George


Barron, Kevin
Garrett, John


Battle, John
George, Bruce


Bayley, Hugh
Gerrard, Neil


Beckett, Rt Hon Margaret
Godsiff, Roger


Bell, Stuart
Golding, Mrs Llin


Benn, Rt Hon Tony
Gordon, Mildred


Bennett, Andrew F
Grant, Bernie (Tottenham)


Benton, Joe
Griffiths, Nigel (Edinburgh S)


Bermingham, Gerald
Griffiths, Win (Bridgend)


Berry, Roger
Grocott, Bruce


Betts, Clive
Gunnell, John


Blunkett, David
Hain, Peter


Boateng, Paul
Hall, Mike


Boyes, Roland
Hanson, David


Bradley, Keith
Hardy, Peter


Bray, Dr Jeremy
Harman, Ms Harriet


Brown, N (N'c'tle upon Tyne E)
Harvey, Nick


Bruce, Malcolm (Gordon)
Hattersley, Rt Hon Roy


Burden, Richard
Henderson, Doug


Byers, Stephen
Hill, Keith (Streatham)


Caborn, Richard
Hinchliffe, David


Callaghan, Jim
Hodge, Margaret


Campbell, Mrs Anne (C'bridge)
Hoey, Kate


Campbell, Menzies (Fife NE)
Hogg, Norman (Cumbernauld)


Campbell, Ronnie (Blyth V)
Home Robertson, John


Campbell-Savours, D N
Hood, Jimmy


Canavan, Dennis
Hoon, Geoffrey


Cann, Jamie
Howarth, Alan (Strat'rd-on-A)


Carlile, Alexander (Montgomery)
Howarth, George (Knowsley North)


Chidgey, David
Howells, Dr Kim (Pontypridd)


Chisholm, Malcolm
Hoyle, Doug


Church, Judith
Hughes, Kevin (Doncaster N)


Clapham, Michael
Hughes, Roy (Newport E)


Clark, Dr David (South Shields)
Hutton, John


Clelland, David
Ingram, Adam


Clwyd, Mrs Ann
Jackson, Glenda (H'stead)


Coffey, Ann
Jackson, Helen (Shef'ld, H)


Cohen, Harry
Jamieson, David


Connarty, Michael
Johnston, Sir Russell


Cook, Frank (Stockton N)
Jones, Barry (Alyn and D'side)


Cook, Robin (Livingston)
Jones, Jon Owen (Cardiff C)


Corbett, Robin
Jones, Lynne (B'ham S O)


Corbyn, Jeremy
Jones, Martyn (Clwyd, SW)


Corston, Jean
Jowell, Tessa


Cousins, Jim
Kaufman, Rt Hon Gerald


Cox, Tom
Keen, Alan


Cummings, John
Kennedy, Jane (L'pool Br'dg'n)


Cunliffe, Lawrence
Khabra, Piara S


Cunningham, Jim (Covy SE)
Kilfoyle, Peter


Cunningham, Rt Hon Dr John
Kirkwood, Archy


Dafis, Cynog
Lestor, Joan (Eccles)


Darling, Alistair
Lewis, Terry


Davies, Bryan (Oldham C'tral)
Liddell, Mrs Helen


Davies, Chris L'Boro & S'worth)
Litherland, Robert


Davies, Ron (Caerphilly)
Livingstone, Ken


Denham, John
Lloyd, Tony (Stretford)


Dewar, Donald
Llwyd, Elfyn


Dixon, Don
Loyden, Eddie


Dobson, Frank
McAllion, John


Donohoe, Brian H
McAvoy, Thomas


Dowd, Jim
McCartney, Ian






Macdonald, Calum
Reid, Dr John


McFall, John
Rendel, David


McLeish, Henry
Robinson, Geoffrey (Co'try NW)


Maclennan, Robert
Roche, Mrs Barbara


McNamara, Kevin
Rooker, Jeff


MacShane, Denis
Rowlands, Ted


McWilliam, John
Ruddock, Joan


Madden, Max
Sedgemore, Brian


Mahon, Alice
Sheerman, Barry


Mandelson, Peter
Shore, Rt Hon Peter


Marek, Dr John
Short, Clare


Marshall, Jim (Leicester, S)
Simpson, Alan


Martin, Michael J (Springburn)
Skinner, Dennis


Martlew, Eric
Smith, Andrew (Oxford E)


Maxton, John
Smith, Chris (Isl'ton S & F'sbury)


Meacher, Michael
Smith, Llew (Blaenau Gwent)


Meale, Alan
Smyth, The Reverend Martin


Michael, Alun
Snape, Peter


Michie, Bill (Sheffield Heeley)
Soley, Clive


Michie, Mrs Ray (Argyll & Bute)
Spearing, Nigel


Milburn, Alan
Spellar, John


Miller, Andrew
Squire, Rachel (Dunfermline W)


Mitchell, Austin (Gt Grimsby)
Steel, Rt Hon Sir David


Moonie, Dr Lewis
Steinberg, Gerry


Morley, Elliot
Stevenson, George


Morris, Estelle (B'ham Yaidley)
Stott, Roger


Morris, Rt Hon John (Aberavon)
Strang, Dr. Gavin



Sutcliffe, Gerry


Mowlam, Marjorie
Taylor, Mrs Ann (Dewsbury)


Mudie, George
Taylor, Matthew (Truro)


Mullin, Chris
Thompson, Jack (Wansbeck)


Murphy, Paul
Tipping, Paddy


Oakes, Rt Hon Gordon
Touhig, Don


O'Brien, Mike (N W'kshire)
Turner, Dennis


O'Brien, William (Normanton)
Tyler, Paul


O'Hara, Edward
Walker, Rt Hon Sir Harold


Olner, Bill
Walley, Joan


O'Neill, Martin
Wareing, Robert N


Orme, Rt Hon Stanley
Wicks, Malcolm


Parry, Robert
Wigley, Dafydd


Pendry, Tom
Williams, Rt Hon Alan (SW'n W)


Pickthall, Colin
Williams, Alan W (Carmarthen)


Pike, Peter L
Wilson, Brian


Pope, Greg
Winnick, David


Powell, Ray (Ogmore)
Wise, Audrey


Prentice, Gordon (Pendle)
Worthington, Tony


Prescott, Rt Hon John
Wray, Jimmy


Primarolo, Dawn
Wright, Dr Tony


Purchase, Ken
Young, David (Bolton SE)


Quin, Ms Joyce



Radice, Giles
Tellers for the Noes:


Randall, Stuart
Mrs. Bridget Prentice and Mr. Eric Clarke.


Raynsford, Nick

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).

Orders of the Day — EDUCATION (STUDENT LOANS) BILL [MONEY]

Queen's recommendation having been signified—

Motion made, and Question put forthwith, pursuant to Standing Order No. 50A(1 )(a),

That, for the purposes of any Act resulting from the Education (Student Loans) Bill, it is expedient to authorise the payment out of money provided by Parliament of—

(a) any sums required by the Secretary of State for paying subsidy in respect of private sector student loans, and
(b) any increase attributable to the Act in the expenses of the Secretary of State under the Education (Student Loans) Act 1990.—[Mr. Wells.]

Question agreed to.

Orders of the Day — Teachers Superannuation (Contracting Out)

The Parliamentary Under-Secretary of State for Education and Employment (Mr. Robin Squire): I beg to move,
That the draft Contracting Out (Administration of the Teachers' Superannuation Scheme) Order 1995, which was laid before this House on 15th November, be approved.
The order will allow my right hon. Friend the Secretary of State for Education and Employment to authorise a private sector company to administer the teachers superannuation scheme in England and Wales. An executive agency in my Department, the Teachers Pensions Agency, administers the scheme at present. The TPA provides a good service to members of the scheme and the Government have never argued otherwise. The TPA has also achieved its key efficiency targets.
Administering the scheme, however, does not come cheaply. It is a huge scheme with almost 1.25 million members who are, rightly, increasingly interested in their pensions. The TPA's running costs last year were more than £15 million; that is big money. We owe it to the taxpayer to see whether we can make savings in those running costs.
I therefore announced on 1 November that the Government were inviting six private sector companies to tender for a contract to administer the scheme. All six companies judged that they could administer the scheme for less money than it would cost the TPA and to at least as high a standard. Inviting them to submit tenders will allow them to show whether they can do so.

Mr. Peter Kilfoyle: The Minister has mentioned the six companies that were invited to tender. How did the Government decide on those six companies from the original 14 that had shown an interest in the privatised scheme?

Mr. Squire: The hon. Gentleman may recall that we invited expressions of interest and that we received a significant number. The companies were then invited to complete a 50-page questionnaire and inquiries were made, in the case of the six companies, with clients to establish their reputations and bone fides. As the hon. Gentleman knows from the names of the companies, either they are large companies or they have significant assets.

Mr. Harry Greenway: I do not have a direct interest now, but I contributed for 23 years to the teachers superannuation scheme. I was always hugely satisfied with it and, like many teachers, I am extremely worried about any possible change. Can my hon. Friend assure me first, that teachers will lose nothing in pension entitlement as a result of changes in administration and secondly, that the new administration arrangements will be even more efficient than the current ones? If they are to be more efficient, they will have to be extremely good.

Mr. Squire: I assure my hon. Friend that the answer to both his questions is an unqualified yes.

Mr. David Blunkett: How?

Mr. Squire: To take up a sedentary comment by the hon. Member for Sheffield, Brightside (Mr. Blunkett), we


have made it clear that we shall let a contract to administer the scheme only if we are satisfied that it will deliver better value for money. I want to leave the House in absolutely no doubt about that. No improvement in value for money will mean no contract. Equally, if a contract could deliver better value for money, we shall want to let one.

Mr. Blunkett: Will the evaluation of "value for money" be similar to that of Yorkshire Water, which is that the customer does not get water but the company gets increased profits?

Mr. Deputy Speaker (Mr. Michael Morris): Order. That was not in order.

Mr. Squire: I sense that if I were to pursue that avenue—or is it lake?—you would pull me up, Mr. Deputy Speaker.
Members of the scheme naturally want to know what letting a contract would mean for them, and my hon. Friend the Member for Ealing, North (Mr. Greenway) made that point clearly. I should like in turn to make several points of clarification, because there have been some misconceptions with which I have sought to deal in correspondence outside the House. I shall be happier still to make those points clear for the benefit of the House this evening.
First, there is no question of privatising teachers' pensions and, of course, there never has been. Any contract would be for the administration of the scheme only. Whether we let a contract or not, the scheme itself will stay in the public sector. My right hon. Friend the Secretary of State for Education and Employment will remain responsible to the House for the scheme, and she—not any contractor—will retain control over decisions affecting entitlement to benefits under the scheme or the amount of those benefits.
Secondly, letting a contract would not affect the size or safety of a teacher's pension one iota. Indeed, it is impossible for it to do so, not least because the scheme does not have a real pension fund. The pension contributions go straight to the Exchequer, which guarantees the payments to which members of the scheme are entitled. Those payments therefore cannot be at risk. Since a contractor would not be managing a pension fund, he could not make a profit from it. To quote King Lear,
Nothing will come of nothing.
If we proceed, however, we shall pay the contractor an agreed fee for administering the scheme.
Thirdly, we will not allow the standard of service to fall. Any contract would require a standard of service and performance that will be at least as high as that which the TPA would provide. We shall make sure that any contractor meets that standard, and all six companies intend to do so.
Fourthly, we are absolutely committed to ensuring that the scheme continues to operate smoothly and without interruption. We shall expect—

Ms Hilary Armstrong: What will happen at Darlington?

Mr. Squire: I will come to that matter, if the hon. Lady restrains herself for a moment. We shall expect the

contractor to deliver good service from day one of the contract. We are satisfied on the basis of the evidence we have seen so far that all six companies are reputable organisations and have access to substantial financial resources, and that relations between their staff and management are sound.

Mr. Kilfoyle: Why are the Government seeking to introduce the measure at this particular time? A next steps feasibility study was carried out in 1990 which investigated the proposal that agency status be given to what was then the pensions branch of the Department of Education and Science. The conclusions of the study were a complete contradiction of what the Government are now saying. What has happened in the intervening five years to change the Government's opinion on the privatisation of the service?

Mr. Squire: We commissioned a report by KPMG, which we received in December 1994. It claimed—among other things—that the scheme could be operated with significant savings. We owe it to the taxpayer to ensure that if significant savings can be made—I have covered the quality of service angle—we should explore those. I should have thought that the hon. Gentleman would support the Government in that.

Mr. Kilfoyle: I am sorry to labour the point with the Minister, but the KPMG report was sought on the basis of only one option, which was the contracting out of the administration of the scheme. I repeat my question. Why did the Government change their mind in the intervening five years? What changed so markedly to lead the Government to commission that report on the basis that there was no option other than privatisation?

Mr. Squire: I can add little to what I have said to the hon. Gentleman, beyond reminding him that the Government seek to make savings to the taxpayer whenever and wherever we can. The size of the pension scheme would alone have given justification for us to return to the matter periodically, and the hon. Gentleman will be aware that the TPA expects to make savings of some 7.5 per cent. in a three-year period.

Mr. Harry Greenway: Just so it is clear beyond peradventure, am I to understand that the administration of the scheme—currently based in Darlington—is to be paid for by the taxpayer? Is the administration not financed out of the scheme itself, and therefore paid for—directly or indirectly—by teachers?

Mr. Squire: I have sought to make a distinction between, on the one hand, a pension fund with all that that might imply and, on the other hand, the simple fact that teachers' pensions are paid, year in year out, by the agency at Darlington. I concede, in light of the sad events of the past decade, that there is the possibility of a pension fund or part of such a fund going astray, but that possibility does not exist in this case. The cost of the teachers' scheme is a straight charge on the taxpayer. Teachers themselves are taxpayers, and if the cost of administering the scheme can be significantly reduced, it is self-evidently in the interests not just of teachers but of taxpayers in general.
Fifthly, we would not allow a contractor to advise teachers whether to join or leave the scheme. Teachers would need to consult an independent financial adviser if they were in doubt, as they do at present.
Sixthly, we would not allow a contractor to use data on teachers for purposes other than administering the scheme. All six companies have declared that they will keep data concerning members of the scheme confidential.

Mr. Don Foster: Will the firm which obtains the contract—if any of the six do so—be allowed to seek to persuade members of the TPA to opt for their own personal pension scheme through that company?

Mr. Squire: I shall come back to the hon. Gentleman during the debate on that, as I do not want to give him a wrong answer. If he will wait a short while, I shall answer him.
Seventhly, we would require a contractor to have effective arrangements for considering complaints from members of the scheme. A contractor would have to have an internal complaints machinery. If this failed to resolve the problem, a complainant would have the right to appeal to the Secretary of State. Members would also be able—as they can at present—to seek redress through the pensions ombudsman. There will be at least as much scrutiny of the administration of the scheme in the private sector as there is now.

Ms Armstrong: One of the current problems with the pensions ombudsman is that each of its reports is secret and is not available for public scrutiny because the ombudsman is accountable to the pensions industry. As this is a public scheme, will the Minister undertake that any complaint to the ombudsman will be published and be open to public scrutiny?

Mr. Squire: I shall consider what the hon. Lady says and come back to her at the end of the debate. It is a serious suggestion, and I want to give it proper consideration. Incidentally, the hon. Lady previously made some reference from a sedentary position to Darlington. She may not have picked up on the point that all six companies have confirmed that they would intend to make Darlington the core centre of their operations.

Ms Armstrong: rose—

Mr. Alan Milburn: rose—

Mr. Squire: It looks as if I have started a competition. I know that the hon. Lady will understand if I give way to the hon. Member for Darlington (Mr. Milburn).

Mr. Milburn: The mention of Darlington is my cue, as the Minister knows. Could he define what core administration means?

Mr. Squire: No, not in the context of the debate. Not simply because the companies have already made it clear that they see Darlington as a key part of their operations but in view of the skill and expertise of the Darlington staff, logic suggests to me that a significant proportion, if not the entirety of the operations, would be based in Darlington.

Mr. Edward O'Hara: As all six companies seem interested in the advantages of the facilities at Darlington, can the Minister assure us that no sweeteners will be offered to any company which takes on the scheme in the form of a cheap handing over of existing facilities?

Mr. Squire: I willingly give that assurance to the hon. Gentleman. Nor would sweeteners be necessary. I am not

sure whether he heard my earlier comments. All six companies believe that they can run the operation at least as efficiently, if not more so, and for a reduced cost. There is no question of sweeteners.

Ms Armstrong: Will the Government make it a condition of the contract that the core administration continues in Darlington? Our experience has been too frequent that a commitment is given in the beginning and three or four years later is reneged on.

Mr. Squire: That issue was raised by the hon. Member for Darlington in a recent meeting that I had with him. I am advised that under European Union law, it would probably be illegal to do as the hon. Lady asks. We are not able to specify a particular place. I reassure her inasmuch as I can that, as all six companies have volunteered—they were not required so to do—the information that they would wish to site their operations at Darlington, in a sense her question is unnecessary. We can look at the reality of the thing, but as I know the hon. Lady will accept, we have to stay within the law.

Mr. Milburn: If the Minister says that legally the Department cannot make it a condition of any contract that Darlington should be the location of the business operation of a privatised Teachers Pensions Agency, and if he says that he cannot define core administration, are not the assurances given by the six companies about staying in Darlington meaningless?

Mr. Squire: I understand, and the whole House understands, that the hon. Member for Darlington is in a special position. When he looks at the standing of the companies and the names behind some of them and when he considers the self-interest of the companies in using the expertise currently available at Darlington, he will see why his comment, in fairness, is wide of the mark.
Lastly in my list of details, I confirm that we have no plans to allow a contractor to impose new charges on members of the scheme or their employers for services provided under the contract.
I trust that not only those hon. Members present in the Chamber but people who may subsequently read the report of the debate will accept that the eight points that I have made—eight of the best—allay the unjustified worries that I have heard expressed. I submit that if we let a contract, all parties would stand to benefit. Let me briefly explain why.
First, the taxpayer would benefit, because it would cost less to administer the scheme. There is sometimes a tendency to forget the taxpayer. We should not do so. Everybody is a taxpayer, so everybody, including teachers themselves, benefits if we can deliver public services more economically. There is scarcely an argument there.
Secondly, teachers and retired teachers would benefit. There is every prospect that they would receive not only as good a service as the TPA provides, but a better, faster, more responsive service. We have invited comments on a draft statement of the service that a contractor would have to provide. That draft provides for higher standards than the TPA achieves now. The six companies would expect to exceed even those higher standards over time—again, I submit to the House, a benefit.
Thirdly, the staff of the TPA would stand to benefit from the new opportunities offered. They would transfer to the contractor—if such a contractor were appointed—


on their current terms and conditions of employment. All six companies have said that they intend to keep the core administration of the scheme at its current location. All six companies see possibilities for introducing new business. That, if it happened, could only be good for jobs and good, in particular, for those currently at Darlington.
I know that change can be unsettling. When things are working fairly well, it is always tempting to leave them as they are. In such a case, the good can so easily become the enemy of the better. I do not believe that we can or should allow that to happen. We must build on the TPA's success. Our current work is designed to do just that. I commend the motion to the House.

Mr. Peter Kilfoyle: I thank the Minister for taking the trouble to read out the letter that he sent to hon. Members on 10 November. He has added nothing to what he had to say in the letter. He read it extremely well. Perhaps it is a recommendation for literacy campaigns at primary school level.
The teachers superannuation scheme is one of the largest occupational schemes in the country. Currently it has 550,000 contributing members—mainly teachers—258,000 members with preserved benefits—mainly former teachers, including those driven out of teaching by Government policy—and 350,000 pensioners—retired teachers or their widows and children. The key difference between the scheme and other schemes is that it is administered not by the 3,500 employers involved but by the Department for Education and Employment, through the Teachers Pensions Agency.
Teachers, practising or retired, look to the scheme to provide them and their dependants with security in retirement, protection from misfortunes such as enforced early retirement due to ill health or redundancy—there have been a lot more of those in the past six or seven years—and protection for their dependants if they die in service or after retirement. Together with that security, they expect those administering the scheme to deal promptly, fairly and sympathetically with their problems and queries, many of which are of an extremely sensitive nature. They also expect high standards of integrity from those administering the scheme and a response which, within the regulations of the scheme, gives first priority to meeting the members' needs.
While organisations representing teachers receive complaints on occasion about the current scheme, they tell me that complaints about the quality of service from the TPA are rare. Even those rare complaints are resolved promptly and satisfactorily. Indeed, the Minister said that everyone acknowledges what a good scheme it is.

Ms Armstrong: I intervene to declare my interest. I think that my pension, or part of it, is still with the TPA. I am aware that I did not declare that interest when I intervened earlier. I support what my hon. Friend says about the quality of the scheme.

Mr. Kilfoyle: Well said. Teachers were originally apprehensive when the scheme was transferred from the pensions branch of the then Department of Education and Science to the Teachers Pensions Agency. However, in all honesty, it has to be said that in the main those fears

proved to be groundless. The teachers believe that the agency has improved the service and dealt efficiently with the proliferation of employers caused directly by the Government's policy of atomising education provision.
Since the TPA was launched in 1992, it is a matter of record that it has performed well. During 1993–94, it was set a target of a 2 per cent. saving in running costs. It achieved 5 per cent. Some 95 per cent. of all written inquiries received a substantive answer within 15 working days. In 99.2 per cent. of cases, retirement awards were processed by the payable date or, if applied for later, within 30 days of receipt of the application. Similar results were obtained for pension calculations. In other words, there is a high quality of service. That is not just my subjective opinion. It is well documented in last December's publication of the fourth annual review of the next steps agencies, which detailed the TPA's performance for 1993–94.
One can always make the case, as the Minister has, for yet further improvements, but only on the basis of further investment in the required resources, as opposed to the transfer of administrative responsibilities. Sadly, that latter option is the only one that the Government examined. I put that point twice to the Minister when he spoke, but he could not give a substantive answer as to why that was the only option to be entertained. The Government's only proposal to KPMG was that the administration be left to a private sector company, according to the consultants, on the supposition that major benefits would result.
The Minister's first argument was that it was feasible for the teachers superannuation scheme to be administered by a private sector contractor. Of course, feasibility is not necessarily synonymous with desirability. Lots of things are feasible, but that is no reason for doing them. The proposal is that the administration should be let out to a private sector company on the supposition, according to KPMG, that major benefits will result, despite the fact that 128 out of 131 organisations originally consulted refused to endorse the proposal. It received only three positive endorsements, but the Government still went ahead with it.
The Government say that it is viable for the teachers superannuation scheme to be administered by a private sector contractor. I accept that, but they do not provide any evidence. The only evidence provided is the vague references in the KPMG report to discussions with unidentified organisations and the fact that there are those who are prepared to undertake the task. How can that assertion be tested against such scant evidence? One can assume only that the whole idea is based more on ideology than on objective analysis.
Secondly, the Government insist that the technical means exist for the transfer. That may well be the case, but that does not mean that it will lead to improvements. The Government insist that it will lead to improvements in the efficiency and effectiveness with which the superannuation scheme is administered, but where is the evidence of, as KPMG asserts,
a general expectation that cost savings in the order of 20 per cent. or more ought to be achievable over a period of five or seven years"?
Will those savings come from the imposition of new charges for services that are free? The Minister says no, but if they are to come from new information technology equipment, why has that hitherto been denied the Teachers Pensions Agency?
The Government argue that private contractors will somehow benefit the TPA, yet it has exceeded its performance targets. On what criteria do the Government base their claim that commercial disciplines will have a positive effect on the quality of service? I can conclude only that that is doublespeak for lower-quality service and the introduction of charges for services that were previously free, which the Minister has denied.
As for the staff employed at the TPA in Darlington, what do the Government claim as the benefit of privatisation? The claim appears to be based on the chimerical notion that financial incentives for the staff will improve efficiency, effectiveness and profitability. I contend that those perceived advantages for the staff will come only from reductions in pay and worsening conditions of service, at least for those who keep their jobs. There is no guarantee, however, that the same number of jobs will be maintained, for the reasons of commercial discipline already adumbrated. Indeed, the then Department for Education staff bulletin of 16 June said that further "possible staff surpluses" had been identified in Darlington. Volunteers for redundancy have been sought from 1995–96 onwards
aimed at avoiding compulsory redundancy".
That is hardly a vote of confidence that the work force can take to heart.
The Minister might argue, of course, that the improved IT will lead to fewer jobs and improved efficiency. If that is the case, I wonder whether he will answer some questions that I tabled for written answer, as to why the Hoskyn's project, aimed at introducing new information technology into the Teachers Pensions Agency, failed and at what cost. I understand that that is a matter of some legal dispute at the moment, but there was an attempt to introduce IT to a very complex scheme through the private sector. It failed miserably. As I understand it, the contract was terminated. What has changed so dramatically that other private sector companies will be able to make similar provision that will work?

Mr. Robin Squire: The hon. Gentleman will find that the answer to his question will be published in either today's or the next day's Hansard. The answer is too complex for me to give him chapter and verse now, although it is not germane to his central issue, which seems to be that, if there has been any private sector involvement and it has gone wrong or has not performed, that of itself eliminates any possibility of considering private sector partnerships anywhere else.

Mr. Kilfoyle: Far from it. I do not suggest that the one naturally follows from the other. What I am saying is that the experience of the agency with the private sector leaves a lot to be desired. It is not merely a question of what happened with Hoskyn's, which subcontracted to an organisation known as UPSI the attempts to update information technology at the TPA. There have been similar, well-documented problems involving the Prudential insurance company, which was contracted to administer the additional voluntary contributions scheme on behalf of the teachers superannuation scheme. That too has been a failure. I am trying to point out that there is no room for confidence in the Minister's assertions that the introduction of IT in itself will necessarily benefit the scheme envisaged.
I also want the Minister to consider the fact that there are nine miles of manual files in the Darlington headquarters. What analysis has he made of the cost of computerising that hoard of information, and how does it accord with his view of increased efficiency and the savings envisaged and, incidentally, the promise in the letter of 10 November, which he read out in lieu of a speech and which was sent to hon. Members on both sides of the House? He said that he is
absolutely committed to ensuring that the Scheme continues to operate smoothly and without interruption".
Despite the Hoskyn's failure, according to KPMG—the Government's consultants—
all of the firms interviewed saw substantial scope to introduce improved IT systems".
Will the Minister guarantee that those firms will be able to deliver what KPMG promises? Somehow, I doubt it. Both the KPMG report and the now famous letter to Members of Parliament of 10 November suggest that the promise is a combination of vague assumptions and terminological inexactitude, which give a totally misleading impression of what is possible in terms of computerising the system overnight without any disruption to the TPA.
In fairness—the consultants were given a very limited brief within which to operate—KPMG listed a series of obstacles to the privatisation proposals. From the Government's perspective, the statutory constraints are the easiest to deal with. That is why they have produced these proposals, using the Deregulation and Contracting Out Act 1994 to supersede the Superannuation Act 1972. However, the House will need to be convinced about the other four areas of concern that KPMG pinpointed. The first was the
quasi-monopoly position of the TPA"—
a certain red rag to this bull of a Government, I am sure, unless the monopoly is a privatised one. KPMG argued that the contributors
need protection against unacceptably low standards of service".
We have heard from the Minister and other hon. Members that the service is of a very high quality. Where are those low standards of service? If the thing is not broken, why do we need to mend it? The Minister must answer that.
KPMG and, presumably, the Government are convinced that there is not
any category of private sector contractor which would be obviously unacceptable".
That is a naive view. Frankly, such a claim from the Government is risible. Are we to believe that the private sector is jam-packed only with models of probity and fair play? Have the Government learnt nothing from past experience of what happens when some of these sharks from the City involve themselves?

Mr. Squire: I do not need to comment on the hon. Gentleman's last rhetorical question, but would he claim that every public sector action, local government or national, has invariably been carried out without any fraud or misfeasance?

Mr. Kilfoyle: The question at issue is whether the proposal before the House will do anything to enhance the teachers superannuation scheme. The fact is that it will not. That is the considered view of the 128 organisations out of 131 that refused to endorse the original proposal.
The KPMG report puts across strongly the idea that the proper use of the database of teachers' records is sacrosanct under the Data Protection Act 1984 and the Financial Services Act 1986. Like the Minister in his view on private sector companies coming into the public arena, I have my own area of naivety, and I must confess that this is it. I would love the Minister to enlighten me as to whether those nine miles of manual records are covered under the Data Protection Act 1984. I understand that manual records are not covered; only material kept on computer is covered.
The third concern, even to KPMG, is the potential risk of failure. One option postulated in the report is that there might, in such circumstances, be a smooth transfer to a new operator. The other option is to revert to the control of the Department for Education and Employment. From that, KPMG tautologically declares that such a provision would do nothing to deter prospective bidders, as they would bid only on the expectation of succeeding.
That is absolutely true. Presumably that is why the confidential pre-tendering discussions took place with the anointed six companies. They cannot lose. They set out their terms in private, set the parameters for tendering with the Government and know that if all else fails, the legislation will ensure that someone else—presumably the Government, or rather, the taxpayer—will pick up the tab if they get it wrong. That will all be at the expense of members of the scheme.

Mr. Squire: It will not.

Mr. Kilfoyle: I am willing to allow the Minister to intervene to explain why it will not. If the scheme fails, who picks up the tab? That question must be answered.
KPMG discounts the chances of large numbers of members opting out of the teachers superannuation scheme. Indeed, in the magic letter of 10 November, the Minister said:
We would not allow the contractor to advise teachers whether to join or leave the scheme.
I accept his word on that, but what of the contractor's agents or the position of consultants who perhaps deal with a contractor who does deal in personal pension plans?
What about the experience of many teachers who have gone into personal pension plans? As the Minister will know, some 8,000 have opted to go back into the scheme because it is so successful. How will the Government guarantee that such second parties will not be able to circumvent the Government's intentions? I do not believe that they can.
We oppose the proposal on the following grounds. It has not been subject to a comprehensive review. Only one option, that of privatisation, has been considered. Both preservation of the status quo and reversion to the DFEE have been ignored. I do not say that they are preferred options, but to have a comprehensive review, all the options must be examined—not just one.
Secondly, the proposal will lead to job losses in Darlington. The people of Darlington and my hon. Friend the Member for Darlington (Mr. Milburn) are in no doubt about that, because only through the shedding of jobs can the putative savings be made. There is no other way in

which it can be done. The proposal ignores the cost-effectiveness of the scheme as it now operates, even given the Government's own criteria for successful appraisal. By their standards, the scheme is successful, yet they still want to dismantle parts of it.
The Government's proposal would put a huge and successful scheme on the slippery slope to total privatisation, far beyond that of its administration alone. I do not believe that this is the end game; it is the start of opening up the scheme as a whole to privatisation. I accept that the Minister has said differently. I shall wait and see what eventuates if the Government have their way. The one fortunate thing is that we expect to be in government before that day comes.
The Government's scheme has no support beyond the ideology of the Government and their money-grubbing City friends. It pays no regard to the views of the members of the teachers superannuation scheme, the employees of the Teachers Pensions Agency or the employers of contributors. The Government are so contemptuous of the interests of those groups that they agreed to meet their representatives on 30 November—three days after tonight's debate—when the die will already have been cast. For those reasons, I urge the House to reject the proposal.

Mr. Alan Milburn: As the House will be aware, the teachers superannuation scheme is run from Darlington by the Teachers Pensions Agency. Therefore, much that I have to say will reflect concerns not only of agency staff but of the whole community in the town.
The Minister is well aware of my concerns, as I have met him and his officials on a number of occasions to voice them. I am grateful to him for the time and trouble that he has always taken. I am also grateful for the support that I have had from my hon. Friends the Members for Liverpool, Walton (Mr. Kilfoyle) and for North-West Durham (Ms Armstrong), and my right hon. Friend the Member for Bishop Auckland (Mr. Foster).
As the Minister is aware, the 375 civil servants who work at the agency in Darlington have faced months of what I can describe only as demoralising uncertainty as they contemplate the potential impact of the handing over of their work to the private sector. It is right at the outset that we should dispose of one issue immediately. What the Minister politely calls contractorisation is in fact privatisation. That is so for a simple reason: virtually all the work of the Teachers Pensions Agency is to do with the administration of the teachers superannuation scheme. Let us not beat about the bush: we are debating privatisation this evening. That is what is before us.
Staff in Darlington are concerned that their jobs will go the way of countless thousands of other jobs, most notably in the privatised utilities, whose workers know what privatisation means for employment; 160,000 workers have lost their jobs since the former public utilities were privatised. If that were to happen to the Teachers Pensions Agency in Darlington, the effects would be serious indeed.
Already, as the Minister is aware, there is grave concern in the town about the impact on employment at the Department for Education and Employment headquarters at Mowden hall arising from the merger of


the two Government Departments. However, the biggest fear is that a successful bidder for the teachers superannuation scheme could decide to relocate work away from the agency's headquarters in the town.
I have not been at all reassured by what the Minister thus far has had to say from the Dispatch Box. He was not able to define core administration, or, apparently, enforce a condition on any of the bidders that they retain employment in Darlington. Staff will draw their own conclusions about what the future may hold.

Mr. Robin Squire: I shall not interrupt the hon. Gentleman persistently, but I hope he will address the question why, should the contract go to the private sector, any contractor would wish to overlook its main asset, which would be the quality of the staff at Darlington.

Mr. Milburn: There is no argument about the quality of the staff or the expertise of the people who work at the agency in Darlington, but it is clear from the names of companies that have expressed an interest and been invited to bid that many are large financial institutions. They may well take the view that it would be cheaper, if not beneficial, to move work away from Darlington. That is our concern.
Darlington borough council has estimated that, if 400 posts were lost, an 8 per cent. increase in unemployment would be generated, in a district that already has more people out of work than anywhere else in County Durham. Darlington simply cannot afford to lose the high-quality employment that the agency offers. The agency is a key employer, which is valued by the whole community.
Ministers say—we have heard it again this evening—that all six firms that have been invited to bid have said that they will retain their core administration in the town. That should come as no surprise to anyone. What else could they be expected to say, particularly at this stage in the bidding process? Naturally they want to send out the right noises, because they want to win the contract.
In any case, as we have already heard this evening, "core administration" does not amount to a guarantee that work will not be relocated away from Darlington. The Minister has confirmed that the Department has not made it a condition of bidding that such guarantees are given by each of the six firms. The Minister cannot have it both ways: he cannot say that all the private companies that are bidding are giving guarantees, and then be unable to define what those guarantees mean. But that is what has happened this evening.
It is not surprising that staff at the agency feel deeply despondent about how they have been treated. After all, the Teachers Pensions Agency, in providing a high-quality service for 1.3 million teachers and more than 3,000 employers, has met all the key performance targets that Ministers set for it.
My hon. Friend the Member for Walton outlined some of the targets that the TPA has succeeded not just in meeting but in surpassing in the past few years. He did not mention, however, that the accuracy performance of the agency's staff has now exceeded the 95 per cent. target set for them by Ministers. It is now at 96.8 per cent. That has been achieved against a background in which the number of establishments being dealt with by the TPA has risen dramatically by 42 per cent. during the past year or so.
On anyone's calculations, those are substantial achievements. They have been made by a dedicated and hard-working staff, who have made efficiency savings of 5 per cent. per annum. Obviously, they accept that further improvements can be made in the future, and they are committed to making those improvements if they are given the opportunity. The crucial issue is whether they will be given that opportunity. Their good performance, however, has counted for nothing against the absolute determination of Ministers to force through the privatisation of an agency that seems, in their minds, almost too successful to belong in the public sector. Let us consider the evidence. When it was established as an executive agency in April 1992, staff received an absolute assurance from the then junior Education Minister, my predecessor, Michael Fallon, that there was no intention of moving the agency out of the public sector.

Mr. David Jamieson: A broken promise.

Mr. Milburn: My hon. Friend is right—three years on, and another Government promise has bitten the dust and gone the way of so many before it.
The KPMG report, on which this order is ultimately based, argued for the privatisation approach, but did not even consider the status quo as an option. Thankfully, others took a different, more measured and considered view.
As my hon. Friend the Member for Walton said, the result of the public consultation exercise undertaken by the Department revealed that only three organisations or individuals backed privatisation. However, my hon. Friend did not say that one of those was a potential contractor, which is hardly a ringing objective endorsement of the Government's proposal to hand over the agency's work to the private sector.
By contrast, the 107 organisations that expressed a preference opposed privatisation. Included in the 107 were four petitions, containing 911 names. I should have thought that a vote of 1,000 to three—or 1,000 to two, if one discounts the vested interest—was a clear verdict. I should have expected a reasonable Minister to listen to it, not least because it reflects the views of the agency's customers.
The Minister was right to remind us that the agency's customers are also taxpayers. They are teachers, employers, schools and local education authorities, and they too have an interest in ensuring the running of a well-ordered, well-administered scheme.
Once the consultation had ended, I would have hoped that a Government who were genuinely committed to consultation, prepared to listen and to put common sense above political dogma, would take stock. I would have hoped that the Government would at least pause for thought. Instead, they decided to push ahead with the privatisation exercise, because they dismissed the results of their own consultation exercise.
According to the Department's response, the Government dismissed the views of those consulted on the ground that
Their objections to contractorisation are not well founded.
The real conclusion to be drawn from this farce is not that the consultees were ignorant, as the departmental document seems to suggest, but that the consultation exercise was a sham from start to finish.
The agency's customers are not the only ones on the record as opposing privatisation. The Minister appears to have a short memory, because, as my hon. Friend the Member for Walton reminded him, just five years ago, in 1990, the Department's next steps feasibility study also concluded against the contractorisation option. We are confronted by an unholy alliance of former members of the Government's Front Bench, teachers, local education authorities and employers who are united against this proposal.
My hon. Friend the Member for Walton asked the Minister what has changed in the past five years, but he received no answer. The answer is simple: in 1995, the lurch to the right by the Government has jettisoned all talk of consensus. The opinion of agency staff, teachers, employers and even that of former Ministers has been jettisoned in the headlong rush towards privatisation. In the Government's mind, there is a simple equation that brooks no opposition: public is bad, private is good—"two legs bad, four legs good".
The triumph of right-wing dogma is being taken to excess in the way in which the privatisation of the agency is being handled. Not only are six companies being invited to bid to run the TSS, in the teeth of considered opposition, but they are being invited to help frame the terms on which they bid.
The Minister has seen a copy of a memo sent to all the staff at the Teachers Pensions Agency in Darlington by P. F. Owen, a senior official in his Department. He explained how the Department is now progressing with the bid process. He said:
We shall shortly invite the representatives, teachers and their employers to comment on a draft statement of the services that any contractor would have to provide administering the scheme.
So far so good.
Similar invitations will go to the staff of the TPA"—
an excellent idea—
to staff in other parts of the department who have been involved in drafting sections of the text"—
that seems sensible—
to the trade union side"—
and finally—
to the six companies that we are inviting to tender.
In other words, those six firms are to be given the not inconsiderable advantage of shaping the yardstick against which their bids will be judged. They are having their cake and eating it.
I would be delighted to give way to the Minister if he could tell me why on earth those six contractors, who threaten to steal work from civil servants at the agency, are being allowed to shape the very terms of the contract for which they will bid.

Mr. Robin Squire: I will ignore some of the emotive words that the hon. Gentleman has used, because they do not assist the debate. The answer is that, not least in order to clarify and to avoid any area of doubt, it seemed an excellent idea that the consultation exercise should involve not just the staff but putative tenderers. The Secretary of State retains the final decision on the form and content of the contract. That is clear and unarguable.

Mr. Milburn: Does not the Minister accept that the process of involving the six firms that are prospectively

in the frame to receive that contract, in the shaping of the terms and conditions under which they will bid, at the very least calls into doubt the impartiality and integrity of the process? It appears to speak volumes for Ministers' determination to force through that privatisation, come what may.

Ms Armstrong: I wonder whether my hon. Friend would like to ask the Minister whether he will publish the comments that were received from the six companies, so that we are able to judge precisely the effect that they have on the subsequent contract.

Mr. Milburn: My hon. Friend's idea is welcome, and extremely sensible. If the Minister were prepared to accept it, it would help to dispel some of the doubts. I hope that, if the Minister has an opportunity to catch your eye again, Mr. Deputy Speaker, he will answer the question asked by my hon. Friend.
However, I now reach the crucial issue. We have heard much about value for money for the taxpayer. We have heard that the people who currently run the agency, and who, the Minister acknowledges, do so successfully, have been denied the right to bid against the private sector for that work. How is it possible to compare like with like, when the people who currently run the scheme are not allowed to bid? The result of excluding the staff from bidding is that the taxpayer is denied a fair comparison between what the private and public sectors can deliver.
Finally, the TSS is a complex scheme, which relies for its success on the scale and expertise of the agency's staff, and the faith of its customers in their integrity and impartiality. Handing the scheme over to untried but commercially interested private sector organisations risks losing both. In my opinion, it is a risk not worth taking.
The TPA is a public sector success story. Instead of privatisation, agency staff in Darlington should be allowed to build on their considerable record of achievement. That is what they want; it is what teachers want; it is what employers want. I hope that the Minister listens for once.

Mr. Don Foster: Recent Government legislation in respect of pension schemes has attempted to increase the power that is given to pensioners and deferred pensioners. Therefore it is perfectly appropriate, in a debate such as this, that we, in deciding which way to vote, take special notice of the opinions of those people who are the customers of the Teachers Pensions Agency. I am sure that many hon. Members have received as much correspondence about that issue as I have. The overwhelming majority of the people who have written to me have expressed considerable anxiety about the proposals that we are debating.
I hold very much to the view, "If something ain't broke, don't fix it," yet the Government are attempting to meddle with something that definitely is not broken. Indeed, Sir Peter Levene, the Government's adviser on privatisation issues, recently said that if a private sector company achieved 85 per cent. of its objectives, it was performing excellently. As the hon. Member for Darlington (Mr. Milburn) said, the TPA is already achieving all its targets and is outstripping its objectives by more than 95 per cent. Indeed, the Teachers Pensions Agency, set up, as


Members will recall, as long ago as 1992, has met and/or exceeded all the efficiency targets set for it by Government.
Several hon. Members have mentioned the report produced by the consultants KPMG, and some have said that that report suggested that it might be possible to make savings of approximately 20 per cent. However, that report, as those who have read it will testify, gives no evidence to support that view except unsubstantiated claims made on behalf of the various private companies that have been consulted, many of which may be involved in the process of attempting to take over the administration of the scheme. Incidentally, it seems a little unwise to be considering administrative changes at the very time when the TPA will be dealing with numerous requests from part-time teachers for retrospective membership of the scheme.
I said at the beginning of my speech that we should take account of the users of the scheme. Indeed, as the hon. Member for Darlington said, we should take much more note than the Government are of all those—including users of the scheme—who were consulted about the proposals. As we know, 131 organisations were consulted, 128 of which refused to support the privatisation; more than 100 directly opposed it. Only three organisations supported it, one of which—as has been pointed out—was a potential bidder for the contract. Moreover, teachers' organisations are unanimous in their opposition to the move. They do not want the scheme to be run for profit by a private contractor. It is also opposed by employers, teachers, civil service trade unions and—importantly—the staff of the TPA.
As we know, in 1990, the Department rejected the notion of letting a contract for the administration of the scheme—no doubt sharing the view that the TPA could make all the improvements that a private sector contractor could make. The whole consultation has been a sham. I noted that, from a sedentary position, the Minister denied a suggestion that he is to meet teachers' representatives in three days' time to consult on the plan; perhaps he would like to confirm that.

Mr. Robin Squire: Let me tell the House—for purposes of clarification alone—that we are discussing an enabling order. I have already made it clear that any decision is still months away, and during that time I want to continue to meet staff members. In that context, I look forward to the meeting to which the hon. Gentleman has referred.

Mr. Foster: Surely that illustrates the concern that many of us feel. Yet again, the Minister has openly admitted that this is enabling legislation—when the Government have not the foggiest idea what the details of their proposals will be. The Minister is seeking the House's permission to go ahead and develop the scheme with a blank cheque, and—as he admits—he still has not engaged in detailed consultation even with the representatives of teachers, who are those most likely to be affected.
The Government's White Paper "The Civil Service: Taking Forward Continuity and Change" stated categorically that there should be a five-year period between reviews after the creation of an agency. As hon. Members will recall, the agency was created in 1992, only three years ago. That is yet another example of rapid changes in Government thinking.
Many who have expressed concern about the proposal have done so because they believe that management in the private sector will create a number of risks. Many are anxious about, for example, the possible loss of an independent and impartial role. The Minister may wish to confirm, or otherwise, that the TPA currently has powers to determine whether members of the scheme should receive benefits in certain defined circumstances, such as ill health, and how much they should receive in those circumstances. If the agency indeed has those discretionary powers, there is a danger that a contractor may decide to say no simply because an increase in the amount of work would result, reducing the profit.
It is also feared that the work involved in letting the contract would be expensive, and that transferring administration of the scheme to the private sector would lead to a loss of continuity and experience. Many people are concerned about their ability to seek redress in the event of poor service or maladministration. The Minister has said that it will be possible to appeal to the Secretary of State or to go to the pensions ombudsman. I hope that the Minister will respond to an earlier query about whether inquiries made to the pensions ombudsman and the handling of such inquiries will be made public.
People are also concerned about the possible mis-selling of personal pensions. I acknowledge that, in his letter to all hon. Members, the Minister gives an assurance that the Government will not let that happen. However, I hope that the Minister will give greater comfort to those who are worried by explaining how he would prevent mis-selling and what action he would take if the firm, its agents or subcontractors attempted to use the database of TPA members as the basis for selling on various personal services, including personal pension plans.
Other hon. Members have questioned whether the 20 per cent. saving that the consultants allege may be possible in a five to seven-year period will be delivered. There is no clear evidence in the KPMG report that it will. Perhaps the House should recall that the TPA has plans to cut its own costs by 7.5 per cent. each year for the next three years. In three years—not five or seven years—that would result in the savings that the KPMG report envisages.

Mr. Squire: There is no argument between the hon. Gentleman and me on that point. He has my assurance that we are anticipating savings over and above those that are built in.

Mr. Foster: I am very glad to hear it, because we can then go a step further. Those working for the TPA have made it absolutely clear that, if the Department were to give them the financial support to enable them to introduce the level of information technology equipment that undoubtedly will be used by the private contractors, they, too, could make or better the savings that are envisaged by the private sector.
I believe that this is a privatisation too far. [Interruption.] I shall give way if the Minister wishes to intervene. I believe that it poses a real threat to quality and to impartiality. The private sector companies will seek to profit from the scheme, with clear implications for the standard of service that members receive. Teachers have worried about their jobs and their pay in recent years and now a black cloud is hovering over their pensions. The


Government's devotion to privatisation has outweighed the reasoned arguments against the change, and therefore I do not believe that it should be supported.

Dr. Robert Spink: While we have heard some interesting speeches by Opposition Members, I believe that they have represented the vested interest rather than the public interest in this matter. Their accounts of the Government's proposals have been tendentious and I do not think that they have reflected properly the Government's actions and proposals, which make a lot of sense to me.
Something must be said in support of the teachers, who work very hard with great dedication and care. By and large, they are motivated by vocation rather than by money. Therefore, they deserve a good, well-administered pension scheme, and in that regard, they have nothing to fear from the Government's proposals.
Labour Members have not yet recognised the great benefits that privatisation has brought to this country in the past two decades. Many industries that used to cost the taxpayer many millions of pounds—£50 million per week is an often-quoted figure—now deliver great benefits. They pay corporation tax and they deliver better services to their customers.

Mr. Kilfoyle: Has the hon. Gentleman read the KPMG report, and if he has, what did he think of its detailed conclusions?

Dr. Spink: I am grateful to the hon. Gentleman for bringing me back to my speech. I shall demonstrate to him that I know what the KPMG report revealed.
The Government invited six private sector companies to tender for a contract to administer the teachers superannuation scheme in England and Wales. Those tenders were invited because the Government considered that letting a contract would provide better value for money than retaining the administration of the scheme within the public sector. The Government have tried and tested that philosophy and it has been proved for almost two decades.
All six companies have declared that they would seek a fee for administering the scheme that is lower than the expected costs of the Teachers Pensions Agency, which currently administers the scheme, so there are real benefits for the taxpayers. Last year, the TPA's running costs were more than £15 million—not an insignificant sum. We owe it to the taxpayer to find out whether we can make savings and if we can, we should do so, but we must be satisfied that a private sector company will deliver better value for money than the TPA. I am happy with the comfort that the Minister has given the House on that point.
Any contract would concern only the administration of the scheme; the scheme itself would remain in the public sector on its current statutory basis. The Secretary of State would remain responsible to Parliament for the scheme and would continue to be advised by his civil servants. Letting a contract would not affect the size or safety of the teachers pension in any way. As we have heard from the Minister tonight, the scheme does not have a real pension fund. Instead, payments are made to and from the Exchequer.
When he replies to the debate, can my hon. Friend confirm that any contract would require a standard of service and performance at least as high as that currently provided by the TPA? Will he undertake to monitor the contractor's performance to ensure that?
Will my hon. Friend also confirm that he is absolutely committed to ensuring that the scheme continues to operate smoothly without interruption and that the contractor would not be allowed to advise teachers whether to join or to leave the scheme, so that the problems that arose with the mis-selling of personal pensions could not occur? We heard the misgivings of the hon. Member for Bath (Mr. Foster) on that matter and I am sure that my hon. Friend will want to give us some comfort.
Will my hon. Friend give us some guarantees about the use and protection of data within the scheme? I am pleased that all six companies have declared that they will keep data confidential and I am sure that that will he the case, but we still require some guarantees. I seek some assurances that a contractor must have effective arrangements in place to deal with any complaints about the administration of the scheme. We know that there are no plans to allow a contractor to impose new charges on members of the scheme or employees and I am grateful to my hon. Friend for that.
Finally, the resolution does not demonstrate a negative attitude to the TPA. It is widely accepted that the TPA provides a good service to its members and I am grateful to the Minister for confirming that once again. We now intend to build on the success of the TPA and the affirmative resolution, which I recommend that Members support, represents a positive move in the administration of the scheme and in the good stewardship of public finances that is absolutely essential.

Mr. Edward O'Hara: The debate shows the enormity of the power that a Minister can take unto himself under the Deregulation and Contracting Out Act 1994. It is shown in the sheer scale of the function that the Government propose to privatise—and I use that word deliberately.
The teachers superannuation fund is one of the biggest such funds, with 1.25 million participants. The public will note that the Government are contracting out that enormous scheme without primary legislation and with inadequate consultation and review. Not least, that will be noted by the 1.25 million teachers and retired teachers who have a direct interest in the matter. I declare my interest as a lifelong member of the Association of Teachers and Lecturers. I have a pension under the teachers superannuation scheme.
The issue was first raised in February and there was some correspondence at the time, but it has become more prominent recently because people have begun to realise that the Government have come to the end of their charade of consultation. I visited schools in my constituency and canvassed teachers—the people most affected by the proposal. The reaction was one of anger at the principle of the proposal and at the lack of consultation.
I received a letter from a teacher in a school in the constituency of Knowsley, North. The school will be coming into my constituency under the boundary review


and at one time I was chairman of the board of governors. I know the teacher, Marjorie Sumner, well. She teaches at the Prescot county primary school and is one of the unsung heroines of the teaching profession—a dedicated and good teacher who has spent 30 years in her locality.
Mrs. Sumner wrote to me today saying:
I am writing to you, as you are my Member of Parliament"—
she lives in my constituency—
to express my opposition to The Governments proposed Privatisation of the Teachers' Pension Scheme.
I have taught for my local L.E.A. for over thirty years, paying into a Superannuation Scheme, without option, on the understanding that my teachers retirement pension would be secure.
Having devoted myself to the teaching profession for all my working life I have implemented the National Curriculum with enthusiasm and expertise spending many hours discussing, preparing and presenting resources for colleagues.
As the Government did not think things"—
the national curriculum—
through, a great deal of time, work, effort and money have been totally wasted and I now feel very let down by The Government once again by them proposing a drastic change in the administration of the Teachers' Superannuation.
I feel I must voice my objection to the lack of consultation and liaison with Teachers.
Marjorie Sumner is by no means a political activist; she is not militant in any way. She is a rank-and-file teacher, moved to anger and disgust by the Government's proposal.
I have some questions for the Minister, some of which have already been raised by my hon. Friends. Cost-effectiveness does not equal efficiency, as has been proved with compulsory competitive tendering in local authorities. What about the cost savings that could be available to the present Teachers Pensions Agency through the introduction of information technology? What about the costs of contracting out in relation to redundancy payments? We can be sure that there will be redundancies and they come at a heavy cost. What about the costs of the scheme in future years?
Once the scheme is contracted out and the facilities taken over, the position will be similar to that in local councils when the refuse collection service was taken over. If the Government are not satisfied with the service at any time in the future, they will not have the core facility available to enable them to take it back. As we have seen with other privatisations, once the tender is let, the negotiating hand is with those who hold the tenders because they have the resources to carry out the function.
What we have here is a short-term ledger benefit. It is probably an illusory benefit when we take into account the start-up costs of the scheme in terms of redundancies, write-downs and, if the facilities at Darlington are not taken over, the drag on resources to maintain the facilities. There are long-term costs in terms of efficiency and in the loss of jobs to the Darlington area.
I have a question to ask the Minister that no one has asked so far. He said several times that he has been given to understand that all six of the organisations that were consulted would probably keep the core function in Darlington. What does that mean? Does it mean, for example, that basic data input operations, such as basic keyboard work, could be subcontracted out to the

Philippines? I should like an answer to that question, and perhaps the Minister will have the opportunity to answer in his reply.
The Government are all about short-term ledger benefit, and that is what the order is all about. The order is all about upheaval in one of the major superannuation funds to attain an ephemeral saving of £15 million in running costs. Horace said:
Parturiunt montes, nascetur ridiculus mus",
which means that mountains go into labour and a ridiculous little mouse is born. Perhaps it is an edible dormouse—a chocolate mouse, a tasty morsel—that makes an infinitesimal contribution to the tax cuts with which the Government are seeking to bribe the electorate.

Mr. Kilfoyle: With the leave of the House. I know that the Minister is anxious to answer the many points that have been made. May I commend him for the magical letter of 10 November to which many of us have referred? The letter was so good that the hon. Member for Castle Point (Dr. Spink) made it seem like a remedial reader—something that should be used more often by Conservative Members.
I should like to ask the Minister two serious questions arising from the debate. First, it is recognised by all hon. Members that the Teachers Pensions Agency has been extremely cost-effective and efficient in dealing with the teachers superannuation scheme. On that basis, if no other, why was it frozen out from bidding for the work? The Government know that the TPA observes commercial disciplines and that it has shown in practice how effectively it can compete with anyone in the private sector.
Secondly, will the Minister announce whether he will publish the notes of the discussions that were held with the chosen companies that led to the terms, conditions and excuses set out in the letter of 10 November?

Mr. Robin Squire: This has been an interesting debate, although I sense that Opposition Members did not either read my famous letter, which is now to be immortalised—I cannot wait for the video—or take into account the comments that I made earlier.
I begin by thanking my hon. Friend the Member for Castle Point (Dr. Spink) for his comments. I share his praise for teachers, and I can confirm that they have a good pension scheme. The scheme is not in any way at risk as a result of the order. As for confirmation of each of the points that he rightly mentioned, I have to save time—Opposition Members will get a little agitated if I go over them—so I confirm them all, as indeed I did in my opening speech.
I shall try in the time available to answer each of the questions asked, beginning with that asked by the hon. Member for North-West Durham (Ms Armstrong). She asked whether complaints to the pensions ombudsman would be published. The answer is no, because—[HON. MEMBERS: "Shame."] When I have finished, hon. Members may be able to withdraw the "shame". Quite a few people who complain to the pensions ombudsman may not be willing to have the facts and detail of that


complaint made public. If, however, they wish to make it public, they have, with great respect, any and every way so to do.
The hon. Member for Bath (Mr. Foster), speaking for the Liberal Democrats, asked a question about the ability for personal pensions to be sold to members of the TPA. I assume that he meant those within the scheme, not the staff. I emphasise what I thought I had made clear, but obviously I had not: the contractor will not be able to use data that he holds on members of the scheme to seek to sell any financial schemes.
The hon. Member for Liverpool, Walton (Mr. Kilfoyle) asked whether manual records will be covered by the Data Protection Act 1984. Manual records will be covered by a confidentiality clause in the contract. If those records are computerised in due course, they will of course be covered by the Data Protection Act.
Further to that point and on the same issue, the hon. Member for Bath asked what would happen if the contractor or its agents misused the database. That would be a breach of contract and would be treated very seriously indeed.
The hon. Member for Darlington (Mr. Milburn) understandably spoke on behalf of many of his constituents and his point was emphasised by at least one other hon. Member. The agency is already committed to making significant savings in this and the next two years. The hon. Gentleman can also guess, although it is not absolutely certain, that, logically, those savings may have staffing implications. That is scarcely a strange suggestion to make.
We are considering how best to safeguard the interests of staff at Darlington. If it is decided to allow the private sector to run the scheme, that would, for reasons that I advanced in opening, give significant promise of long-term stability to staff at Darlington.
It is common ground between the hon. Member for Darlington and me that the quality of staff is high, and I emphasise what I said in an intervention: that precisely because the quality is so good, it would scarcely be in the interests of any incoming contractor to consider not locating its business at Darlington. That is where the knowledge and expertise has been built up and where—obviously—it would remain.

Mr. Milburn: rose—

Mr. Squire: If the hon. Gentleman will forgive me, I will not give way. I was generous in giving way. I am conscious that I have only two and a half minutes left and I am trying to deal with quite a few other questions. There will be opportunities to raise matters outside.
The hon. Members for Darlington and for Walton said that it was disgraceful—or words to that effect—that the TPA had not made a bid. It could have done so. Its staff or management could have launched a bid to buy the agency, but they chose not to do so. That was their choice. They were not required to do so, and they did not do so.
The hon. Member for Darlington asked, and I tried to answer, why companies should be consulted on the draft requirements. I shall try one more time to convince him. Administering the scheme is a complex operation—that much at least should be common ground between us. We

want to give the companies the chance to clarify any points that are unclear. They may also be able to suggest improvements to draft requirements, drawing on their commercial expertise. I confirm, however, that there is no question of watering down the requirements and that there is no suggestion that the companies would seek to do that.
The hon. Member for Bath also asked what discretion the contractor would have in making decisions on entitlements. I can confirm that the Secretary of State would retain control over decisions that affect entitlement to benefits under the scheme or the amount of those benefits.
I will write to hon. Members on points that I have not covered. In essence, there is a choice tonight. There are only two reasons for rejecting the order. The first is that hon. Members have not understood the order and the safeguards that are built into it—I am afraid to say that that may be so—and the second is that hon. Members, especially Opposition Members, are still against the private sector. Despite all the honeyed words of the Leader of the Opposition, who says that Labour has now changed, the reality is that it has not and that is why Labour Members will vote against the order.

It being one and a half hours after the commencement of proceedings on the Motion, MADAM SPEAKER put the Question, pursuant to Standing Order 14B (Proceedings under an Act or on European Community documents).

The House divided: Ayes 244, Noes 205.

Division No. 5]
[9.45 pm


AYES


Ainsworth, Peter (East Surrey)
Clappison, James


Alexander, Richard
Clark, Dr Michael (Rochford)


Alison, Rt Hon Michael (Selby)
Clifton-Brown, Geoffrey


Allason, Rupert (Torbay)
Coe, Sebastan


Amess, David
Congdon, David


Arbuthnot, James
Conway, Derek


Arnold, Jacques (Gravesham)
Coombs, Anthony (Wyre For'st)


Arnold, Sir Thomas (Hazel Grv)
Coombs, Simon (Swindon)


Atkins, Rt Hon Robert
Cope, Rt Hon Sir John


Atkinson, David (Bour'mouth E)
Cormack, Sir Patrick


Baldry, Tony
Couchman, James


Banks, Matthew (Southport)
Cran, James


Bates, Michael
Currie, Mrs Edwina (S D'by'ire)


Batiste, Spencer
Curry, David (Skipton & Ripon)


Bellingham, Henry
Day, Stephen


Bendall, Vivian
Deva, Nirj Joseph


Biffen, Rt Hon John
Dorrell, Rt Hon Stephen


Booth, Hartley
Douglas-Hamilton, Lord James


Boswell, Tim
Dover, Den


Bottomley, Peter (Eltham)
Duncan, Alan


Bottomley, Rt Hon Virginia
Duncan-Smith, Iain


Bowden, Sir Andrew
Dunn, Bob


Bowis, John
Durant, Sir Anthony


Brandreth, Gyles
Dykes, Hugh


Brazier, Julian
Eggar, Rt Hon Tim


Bright, Sir Graham
Elletson, Harold


Brown, M (Brigg & Cl'thorpes)
Emery, Rt Hon Sir Peter


Browning, Mrs Angela
Evans, Jonathan (Brecon)


Budgen, Nicholas
Evans, Roger (Monmouth)


Burns, Simon
Evennett, David


Burt, Alistair
Faber, David


Butler, Peter
Fabricant, Michael


Butterfill, John
Fenner, Dame Peggy


Carlisle, Sir Kenneth (Lincoln)
Field, Barry (Isle of Wight)


Carrington, Matthew
Forman, Nigel


Carttiss, Michael
Forsyth, Rt Hon Michael (Stirling)


Cash, William
Forth, Eric


Channon, Rt Hon Paul
Fox, Dr Liam (Woodspring)


Chapman, Sir Sydney
Fox, Sir Marcus (Shipley)






French, Douglas
Mellor, Rt Hon David


Fry, Sir Peter
Merchant, Piers


Gale, Roger
Mills, Iain


Garel-Jones, Rt Hon Tristan
Mitchell, Andrew (Gedling)


Gill, Christopher
Mitchell, Sir David (NW Hants)


Gillan, Cheryl
Moate, Sir Roger


Goodson-Wickes, Dr Charles
Monro, Rt Hon Sir Hector


Gorman, Mrs Teresa
Moss, Malcolm


Gorst, Sir John
Neubert, Sir Michael


Greenway, Harry (Ealing N)
Newton, Rt Hon Tony


Greenway, John (Ryedale)
Nicholson, David (Taunton)


Griffiths, Peter (Portsmouth, N)
Nicholson, Emma (Devon West)


Hamilton, Sir Archibald
Norris, Steve


Hamilton, Neil (Tatton)
Onslow, Rt Hon Sir Cranley


Hannam, Sir John
Oppenheim, Phillip


Hargreaves, Andrew
Ottaway, Richard


Harris, David
Page, Richard


Haselhurst, Sir Alan
Paice, James


Hawkins, Nick
Patnick, Sir Irvine


Hawksley, Warren
Patten, Rt Hon John


Hayes, Jerry
Pattie, Rt Hon Sir Geoffrey


Heald, Oliver
Pawsey, James


Heathcoat-Amory, David
Peacock, Mrs Elizabeth


Hendry, Charles
Pickles, Eric


Hicks, Robert
Porter, David (Waveney)


Higgins, Rt Hon Sir Terence
Rathbone, Tim


Hill, James (Southampton Test)
Redwood, Rt Hon John


Horam, John
Renton, Rt Hon Tim


Howell, Sir Ralph (N Norfolk)
Richards, Rod


Hughes, Robert G (Harrow W)
Riddick, Graham


Hunt, Rt Hon David (Wirral W)
Robathan, Andrew


Hunt, Sir John (Ravensbourne)
Roberts, Rt Hon Sir Wyn


Hunter, Andrew
Robertson, Raymond (Ab'd'n S)


Hurd, Rt Hon Douglas
Robinson, Mark (Somerton)


Jack, Michael
Roe, Mrs Marion (Broxbourne)


Jackson, Robert (Wantage)
Sackville, Tom


Jenkin, Bernard
Scott, Rt Hon Sir Nicholas


Jessel, Toby
Shaw, David (Dover)


Johnson Smith, Sir Geoffrey
Shaw, Sir Giles (Pudsey)


Jones, Gwilym (Cardiff N)
Shephard, Rt Hon Gillian


Jones, Robert B (W Hertfdshr)
Shepherd, Colin (Hereford)


Kellett-Bowman, Dame Elaine
Shersby, Sir Michael


Key, Robert
Sims, Roger


King, Rt Hon Tom
Skeet, Sir Trevor


Kirkhope, Timothy
Smith, Sir Dudley (Warwick)


Knapman, Roger
Smith, Tim (Beaconsfield)


Knight, Mrs Angela (Erewash)
Speed, Sir Keith


Knight, Rt Hon Greg (Derby N)
Spencer, Sir Derek


Knight, Dame Jill (Bir'm E'st'n)
Spicer, Michael (S Worcs)


Knox, Sir David
Spink, Dr Robert


Kynoch, George (Kincardine)
Spring, Richard


Lang, Rt Hon Ian
Sproat, Iain


Legg, Barry
Squire, Robin (Hornchurch)


Lennox-Boyd, Sir Mark
Stanley, Rt Hon Sir John


Lester, Jim (Broxtowe)
Steen, Anthony


Lidington, David
Stephen, Michael


Lightbown, Sir David
Stern, Michael


Lilley, Rt Hon Peter
Stewart, Allan


Lloyd, Rt Hon Sir Peter (Fareham)
Sumberg, David


Lord, Michael
Sweeney, Walter


Luff, Peter
Sykes, John


Lyell, Rt Hon Sir Nicholas
Taylor, John M (Solihull)


MacGregor, Rt Hon John
Temple-Morris, Peter


MacKay, Andrew
Thomason, Roy


Maclean, Rt Hon David
Thompson, Sir Donald (C'er V)


McLoughlin, Patrick
Thompson, Patrick (Norwich N)


McNair-Wilson, Sir Patrick
Thornton, Sir Malcolm


Madel, Sir David
Thurnham, Peter


Maitland, Lady Olga
Townend, John (Bridlington)


Malone, Gerald
Townsend, Cyril D (Bexl'yh'th)


Mans, Keith
Tracey, Richard


Marland, Paul
Trend, Michael


Marlow, Tony
Trotter, Neville


Marshall, Sir Michael (Arundel)
Twinn, Dr Ian


Martin, David (Portsmouth S)
Viggers, Peter


Mawhinney, Rt Hon Dr Brian
Walden, George





Waller, Gary
Wilshire, David


Wardle, Charles (Bexhill)
Winterton, Mrs Ann (Congleton)


Waterson, Nigel
Winterton, Nicholas (Macc'f'ld)


Wells, Bowen
Wolfson, Mark


Whitney, Ray
Yeo, Tim


Whittingdale, John



Widdecombe, Ann
Tellers for the Ayes:


Wilkinson, John
Mr. Timothy Wood and


Willetts, David
Mr. Gary Streeter.




NOES


Ainger, Nick
Eagle, Ms Angela


Ainsworth, Robert (Cov'try NE)
Eastham, Ken


Allen, Graham
Etherington, Bill


Alton, David
Evans, John (St Helens N)


Anderson, Donald (Swansea E)
Fisher, Mark


Armstrong, Hilary
Flynn, Paul


Ashdown, Rt Hon Paddy
Foster, Rt Hon Derek


Ashton, Joe
Foster, Don (Bath)


Austin-Walker, John
Foulkes, George


Barnes, Harry
Fyfe, Maria


Barron, Kevin
Galbraith, Sam


Battle, John
Galloway, George


Bayley, Hugh
George, Bruce


Bennett, Andrew F
Gerrard, Neil


Berry, Roger
Gilbert, Rt Hon Dr John


Betts, Clive
Godsiff, Roger


Blunkett, David
Golding, Mrs Llin


Boateng, Paul
Gordon, Mildred


Bradley, Keith
Grant, Bernie (Tottenham)


Bray, Dr Jeremy
Griffiths, Nigel (Edinburgh S)


Brown, N (N'c'tle upon Tyne E)
Griffiths, Win (Bridgend)


Bruce, Malcolm (Gordon)
Grocott, Bruce


Burden, Richard
Gunnell, John


Byers, Stephen
Hain, Peter


Caborn, Richard
Hall, Mike


Callaghan, Jim
Hanson, David


Campbell, Mrs Anne (C'bridge)
Hardy, Peter


Campbell, Menzies (Fife NE)
Harvey, Nick


Campbell, Ronnie (Blyth V)
Henderson, Doug


Campbell-Savours, D N
Hill, Keith (Streatham)


Canavan, Dennis
Hinchliffe, David


Cann, Jamie
Hogg, Norman (Cumbernauld)


Carlile, Alexander (Montgomery)
Home Robertson, John


Chidgey, David
Hoon, Geoffrey


Chisholm, Malcolm
Howarth, Alan (Strat'rd-on-A)


Church, Judith
Howells, Dr Kim (Pontypridd)


Clapham, Michael
Hughes, Roy (Newport E)


Clark, Dr David (South Shields)
Hughes, Simon (Southwark)


Clarke, Eric (Midlothian)
Hutton, John


Clarke, Tom (Monklands W)
Ingram, Adam


Clelland, David
Jackson, Helen (Shef'ld, H)


Clwyd, Mrs Ann
Jamieson, David


Coffey, Ann
Johnston, Sir Russell


Cohen, Harry
Jones, Barry (Alyn and D'side)


Connarty, Michael
Jones, Lynne (B'ham S O)


Corbett, Robin
Jones, Martyn (Clwyd, SW)


Corbyn, Jeremy
Jowell, Tessa


Corston, Jean
Kennedy, Jane (L'pool Br'dg'n)


Cousins, Jim
Khabra, Piara S


Cox, Tom
Kilfoyle, Peter


Cummings, John
Kirkwood, Archy


Cunliffe, Lawrence
Lewis, Terry


Cunningham, Jim (Covy SE)
Liddell, Mrs Helen


Dafis, Cynog
Litherland, Robert


Darling, Alistair
Lloyd, Tony (Stretford)


Davies, Bryan (Oldham C'tral)
Llwyd, Elfyn


Davies, Chris (L'Boro & S'worth)
Loyden, Eddie


Davies, Rt Hon Denzil (Llanelli)
McAllion, John


Denham, John
McAvoy, Thomas


Dewar, Donald
McCartney, Ian


Dixon, Don
Macdonald, Calum


Dobson, Frank
McFall, John


Donohoe, Brian H
McLeish, Henry


Dowd, Jim
McWilliam, John


Dunwoody, Mrs Gwyneth
Madden, Max






Mahon, Alice
Rooker, Jeff


Mandelson, Peter
Rowlands, Ted


Marshall, Jim (Leicester, S)
Salmond, Alex


Martin, Michael J (Springburn)
Short, Clare


Martlew, Eric
Simpson, Alan


Maxton, John
Skinner, Dennis


Meale, Alan
Smith, Andrew (Oxford E)


Michael, Alun
Smith, Chris (Isl'ton S & F'sbury)


Michie, Bill (Sheffield Heeley)
Smith, Llew (Blaenau Gwent)


Michie, Mrs Ray (Argyll & Bute)
Spearing, Nigel


Milburn, Alan
Spellar, John


Miller, Andrew
Squire, Rachel (Dunfermline W)


Morley, Elliot
Steel, Rt Hon Sir David


Morris, Estelle (B'ham Yaidley)
Steinberg, Gerry


Mowlam, Marjorie
Stevenson, George


Mudie, George
Sutcliffe, Gerry


Mullin, Chris
Taylor, Mrs Ann (Dewsbury)


Murphy, Paul
Taylor, Matthew (Truro)


Oakes, Rt Hon Gordon
Thompson, Jack (Wansbeck)


O'Brien, Mike (N W'kshire)
Tipping, Paddy


O'Brien, William (Normanton)
Touhig, Don



Turner, Dennis


O'Hara, Edward
Tyler, Paul


Olner, Bill
Walker, Rt Hon Sir Harold


O'Neill, Martin
Walley, Joan


Orme, Rt Hon Stanley
Wareing, Robert N


Pickthall, Colin
Wicks, Malcolm


Pike, Peter L
Wigley, Dafydd


Pope, Greg
Williams, Rt Hon Alan (Sw'n W)


Powell, Ray (Ogmore)
Williams, Alan W (Carmarthen)


Prentice, Gordon (Pendle)
Wilson, Brian


Prescott, Rt Hon John
Winnick, David


Primarolo, Dawn
Wise, Audrey


Purchase, Ken
Worthington, Tony


Quin, Ms Joyce
Wright, Dr Tony


Raynsford, Nick
Young, David (Bolton SE)


Reid, Dr John



Rendel, David
Tellers for the Noes:


Robinson, Geoffrey (Co'try NW)
Mr. Jon Owen Jones and Mr. Joe Benton.


Roche, Mrs Barbara

Question accordingly agreed to.

Resolved,

That the draft Contracting Out (Administration of the Teachers' Superannuation Scheme) Order 1995, which was laid before this House on 15th November, be approved.

Orders of the Day — EDUCATION

Ordered,

That Mr. Greg Pope be discharged from the Education Committee and Mr. Alan Keen be added to the Committee.—[Mr. MacKay.]

Orders of the Day — ENVIRONMENT

Ordered,

That Mr. John Denham and Jane Kennedy be discharged from the Environment Committee and Mr. Neil Gerrard and Mr. Matthew Taylor be added to the Committee.—[Mr. MacKay.]

Orders of the Day — HOME AFFAIRS

Ordered,

That Ms Janet Anderson be discharged from the Home Affairs Committee and Jean Corston be added to the Committee.—[Mr. MacKay.]

Orders of the Day — NATIONAL HERITAGE

Ordered,

That Mr. Nigel Waterson be discharged from the National Heritage Committee and Mr. Tim Renton be added to the Committee.—[Mr. MacKay.]

Orders of the Day — SOCIAL SECURITY

Ordered,

That Mr. Malcolm Wicks be discharged from the Social Security Committee and Mr. Alan Howarth be added to the Committee.—[Mr. MacKay.]

Orders of the Day — TRADE AND INDUSTRY

Ordered,

That Ann Coffey, Mr. Richard Caborn and Mr. Nick Harvey be discharged from the Trade and Industry Committee and Mr. Roger Berry, Mr. Martin O'Neill and Joan Walley be added to the Committee.—[Mr. MacKay.]

Orders of the Day — TRANSPORT

Ordered,

That Mr. Nick Hawkins be discharged from the Transport Committee and Mr. Eric Pickles be added to the Committee.—[Mr. MacKay.]

Orders of the Day — TREASURY

Ordered,

That Mr. Mike O'Brien be discharged from the Treasury Committee and Mr. Clive Betts be added to the Committee.—[Mr. MacKay.]

Orders of the Day — Higher Education

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

10 pm

Mr. Don Foster: I am very grateful to you, Madam Speaker, for giving me this opportunity to raise this important matter.
Earlier today, we were discussing the Education (Student Loans) Bill, and, in so doing, we touched on the view of many hon. Members that it does not begin to tackle the growing problems of poverty and hardship faced by many students. In this brief debate, I want to draw attention to the growing concern about the significant rise in the level of stress among students in higher education—stress brought on partly, but not exclusively, by financial worries.
If the Government are not prepared to take serious action to reduce the cause of those problems, as they ought, they should at least take action to assist higher education institutions and to bolster their support and welfare services to enable better counselling and guidance to be given to students suffering the effects of such stress.
In answers to recent parliamentary questions, the Government have acknowledged that, in the past five years, they have undertaken no research into the number of students suffering from stress and depression. In such answers, they have also argued that they have no powers to intervene, and admitted that they have taken no steps to improve welfare and counselling services during the past five years.
During the summer, I carried out a detailed survey of the issue. The results were very worrying. As a result of the survey's indications, I believe that there are a number of areas in which the Government could take action.
When conducting my survey, I contacted all 117 universities in England, Scotland, Wales and Northern Ireland about levels of stress and student suicide during the past 10 years. I ensured that Ministers received a copy. Seventy-two per cent. responded, and, to ensure that the results were rigorous and consistent, the 40 universities that provided us with complete data were used in the final statistical analysis.
The study was based on a survey of the responses from all 72 universities, as well as on the records and informed opinion and comments from welfare counsellors, heads of student services and vice-chancellors. We also liaised with organisations such as the Association for Student Counselling.
The survey showed that, with rare exceptions, universities reported a significant increase in the number of students seeking some form of counselling. Financial concerns were cited as the most common factor inducing stress in students. For example, one university described financial pressures on students as "intolerable".
Other reasons for the need for counselling were also cited. Current academic and future employment pressures were among the common causes mentioned. Academic pressures resulted mainly from the shortage of books and equipment and overcrowded study places. Employment pressures were brought on by knowledge of growing graduate unemployment.
I said that there were a range of different issues. One issue of particular concern, which relates to the debate we had earlier today, is stress caused by money problems. As a result of such money problems, more and more students have to take jobs during term time, which has often led to exhaustion and to their falling behind with their studies.
Only today, I received a letter from a student in Lancaster. Unfortunately, I cannot read her surname. I am delighted to see the hon. Member for Lancaster (Dame E. Kellett-Bowman) in her place. The student, who is at St. Martin's college, wrote:
I'm a mature student, a single-parent, who is finding it hard to keep balancing my financial juggling act. I also work part-time as my grant does not even cover my outgoings. I am not allowed income support and family credit was also rejected on the grounds that I get a grant.
My case is not unique. Most students are having a difficult time. We have no options but to work to make ends meet. This is causing a lot of stress, physical fatigue and illness.
Problems with increasing stress were also caused by the growth in the number of students not being matched by the growth in the number of staff. As a result, lecturers have to deal with larger class sizes, and therefore find it more difficult to give attention to individual students. As one academic in our study reported:
There is often little time or energy left for responding to the individual personal and academic needs of students.
Sadly, there has been an increase in the number of young people committing suicide. Although the rate of suicide at university is lower than in the most comparable prevailing age group—that is, 15 to 25-year-olds—there has nevertheless been a significant increase in the number of students in higher education committing suicide in recent years. The rate, allowing for the expansion in student numbers, has risen fourfold between 1983–84 and 1993–94.
From the survey, we also noted that male students from 1993–94 were three times more likely to take their lives than female students. We also noted that mature students are especially vulnerable. Of all students who took their own lives, 45 were aged 25 and above, although such students constitute only 22 per cent. of the total student body.
Ours is not the only survey that has looked into the issue. In a somewhat limited survey last month, the British Medical Association discovered that university doctors were reporting a rising number of students being treated for stress-related illness. The survey followed concerns over the mental and physical health of students raised by the British Association of Health Services in Higher Education. It had found growing instances of panic attacks, chronic fatigue and depression among students, especially among those trying to hold down part-time jobs while studying or worrying about their employment prospects on completing their courses.
Professor Colin Pritchard, professor of social work studies at Southampton university, is researching a new book on the causes of suicide, to be called "Suicide—the ultimate rejection?" From his studies, he says that many tragedies could be avoided if students had more access to counselling and one-to-one contact with tutors.
Other sources that support our survey include a recent National Union of Students study, "Values for Money", which was published in March this year. It revealed that


one in four students admitted to "often" or "always" worrying about their financial positions, and that 10 per cent. reported often having depressed moods.
The study said that 39 per cent. of the students surveyed considered themselves to be in financial hardship. More than one in four admitted to "often" or "always" worrying about financial hardship, and one in four had considered dropping out of his or her course because of financial difficulties. The survey also confirmed our study, which revealed that many students were now beginning to work part time. Just under a third of those surveyed had worked part time during term time while at university. Of those who worked, 69 per cent. thought that the work had affected their studies.
Universities are well aware of that growing problem. They have responded as well as they could, by providing a range of support and counselling services, with appropriate medical and psychiatrically trained staff where possible. A multi-layered provision has developed, including welfare tutorials offered by academic staff and counsellors alike. Residential wardens in halls of residence and chaplaincies have also become involved.
A range of other support services are developing through student welfare services, provided by either the university or the student union or, in some cases, both. A number of voluntary organisations have become involved in this issue. I draw attention to the valuable work of Nightline.
Having published our survey, we circulated it to the institutions that we had originally invited to respond to it. We received many responses from them in the light of the content of our survey. Plymouth university welfare unit's annual report said:
With students facing increasing financial hardship the workload in Welfare has increased dramatically with the first cases of malnutrition in students being reported.
The counselling and advisory unit at Westminster university responded by saying that our report
is exactly what is needed to bring the whole topic into the open … for several years now it has been a growing problem in British Universities and yet it is one which is scarcely talked about, sometimes even among professionals. In a climate where suicide is still something of a taboo word, it is a great relief to see that our findings are endorsed by objective research such as yours".
Essex university said that the picture that our survey
paints is clearly recognisable at this University and it adds to the already compelling case for a reform of student funding that would tackle student poverty.
This is not primarily a debate about student funding—we had that debate earlier today. However, there is a case for suggesting that the Government could take some action at least to find ways of alleviating some of the difficulties of students suffering as I have described. There are enormous variations from university to university. For example, the "Push Guide to Which University 96" reports widely differing figures for the number of students per counsellor, which range from one counsellor per 36 students to one counsellor per 833 students.
In the past few days, thousands of students have demonstrated in London to protest about increased hardship. At the same time, academics at Westminster university have hosted a conference entitled "Managing

Poverty; A one-day conference to explore poverty in education and its impact on the student experience". The time has come for action to be taken.
Edinburgh university, for example, has now set up its own labour exchange to help hard-pressed students find part-time jobs during term time, as an alternative to falling in debt. The Samaritans have launched a new telephone number for students, and many university nightlines now work in conjunction with the Samaritans. Even the Higher Education Funding Council is funding a research project at the university of Northumbria on the increase in the number of students in UK universities who have acute mental health problems. The time has therefore come to take action.
I therefore urge the Minister to consider whether it is possible to establish a working party in conjunction with the National Union of Students, the Committee of Vice-Chancellors and Principals and the relevant voluntary organisations to review counselling services in our universities and student unions; to identify them and publicise examples of good practice; and to report on any identified deficiencies in levels and type of provision. I hope that they will also find the means of creating better publicity about the availability of existing student counselling services. In particular, I hope that they will find a way to target such publicity at male students, since our study suggests that those students in particular still feel that there is a stigma attached to seeking help.
The Secretary of State, having seen a copy of our survey results, responded to me only today, saying that it related to
a matter which cannot help but concern everyone involved in higher education.
Based on the Minister's response, I hope that that concern will be translated into action.

The Minister of State, Department for Education and Employment (Mr. Eric Forth): I thank the hon. Member for Bath (Mr. Foster) not only for bringing this important matter to the attention of the House, but for doing me the courtesy, as he invariably does, of letting me have the background material to the debate so that I could consider it and give a measured response.
I looked carefully at the document that the hon. Gentleman sent to me, which forms the basis of the debate, and, because it is relevant to our consideration, it would be fair to quote the phrase:
We feel it appropriate to emphasise that this is by no means an authoritative survey.
The hon. Gentleman has accepted that. I do not mean to undermine the thrust of the findings contained in the document, but it is fair to say that, like so much other information on the subject, the document is not necessarily representative. It may not give the full picture, but it certainly highlights a matter of concern not only to the hon. Gentleman but to many other people.
I should like to quote two paragraphs from the document because they provide a relevant background to the subject. The first paragraph states:
In the last ten years a dramatic change has taken place in the field of Higher Education. More and more people have enjoyed the benefits of higher education. Students are increasingly drawn from


a wider variety of backgrounds; there are more mature students, women returners, disabled students and people from ethnic minority backgrounds.
The paragraph also outlines that whereas in the 1983–84 academic year there were 882,000 students in higher education, that number had risen by 1993–94 to 1,573,000. We are obviously dealing with a much larger and disparate group of people in higher education, whereas, as the House will know, many years ago it was an elite that received higher education. I think it is fair to describe it as such. Now, thankfully, the kind of people who are coming into higher education are a much more varied group. We all welcome that. That is the first relevant factor that one must bear in mind.
The hon. Gentleman's report also refers to an interesting and revealing fact. The relevant paragraph states:
The expansion of the university system has taken its toll on the student population. With rare exception, universities report more and more students seeking some help.
The next sentence contains the key phrase:
Clearly that increase can be attributed to the growing awareness in our society of counselling services. To seek professional help is no longer the taboo it once was.
I find that revealing and relevant because there is no doubt, whether one agrees with it or not, and one does not have to, that society in the 1990s has become much more aware of the concept of stress and its manifestations. Right across society people have become much more willing to identify stress in themselves and to seek advice about and support for it. Some people may almost regret that, while others may welcome it. It is not for me to do either on this occasion.
As background to the case, it is a relevant consideration that whereas, in the past, people sought advice or help from their families or friends, or perhaps went to the bar and got drunk, if they felt under stress, now they are much more prepared to identify stress themselves, and seek advice for that.
I quote once more from the report. I hope that the hon. Gentleman is happy that I am quoting so frequently from his document.
However, as one senior academic observed,
`for the counsellors the irony is that the kind of help which they can offer is now highly acceptable to many just at a time when the level of distress is greater than it has probably ever been.'''
We should bear in mind the fact that that is the context in which we consider that difficult aspect. That should be weighed against the claims that the hon. Gentleman made about drop-out rates. Drop-outs were also mentioned in our earlier debate on Second Reading of the Education (Student Loans) Bill.
Our figures on drop-out rates do not support the contentions that have been made, not only in the debate, but previously. According to information that is available to the Department for Education and Employment, the drop-out rate of students from full-time and sandwich first degree courses is about 17 per cent. in the latest academic year for which we have reliable figures, and we know of no evidence of a rising trend.
That rate has fluctuated. The rate was 17 per cent. in 1987–88, before the introduction of student loans. As far as I am aware, it continues to be close to that rate. It may increase and decrease year on year—that would he no surprise—but I know of no firm evidence to support the

allegation that was made that drop-out rates from higher education are significantly greater than they were in the past. However, we are examining that and I have urged my officials to consider the reasons for the incidence of drop-out rates in different institutions for that and connected reasons.
Allegations are also made about the reasons behind drop-outs. I am aware of a recent survey at Sheffield Hallam university, which was published earlier this year, on the results of its retention rates research project. It covered, I admit, a limited sample of students who had left the university without completing their courses.
Interestingly, the research showed that, when asked for the primary reason for dropping out, 44 per cent. of the students who had dropped out cited an unsuitable course, 19 per cent. cited personal reasons and 16 per cent. cited academic problems. When asked for all reasons, 41 per cent. said that they disliked the course and 17 per cent. mentioned personal reasons. Eleven per cent. named financial problems as a factor—the same as the proportion who mentioned academic difficulties.
I believe that that research gives the lie to several contentions that were made today in different ways—not least the allegation that student hardship or poverty is driving students out of higher education. That survey, albeit of only one institution, does not support that contention.
The survey suggests what, I believe, we have all known—that many students become unhappy or disillusioned with the course that they have selected as they find out more about it, and switch courses or leave altogether. That is regrettable but understandable. It does not support the contention or allegation that widespread student hardship or poverty is driving students out of higher education—almost the opposite.
Whether the survey supports contentions about much greater stress, whether stress is greater now than it has been or whether simply more people are prepared to admit to it or recognise it and seek help for it, is a complex question, to which we do not have ready answers.
As I believe that the hon. Gentleman said, most institutions take the welfare of students very seriously. They all produce a statement setting out their policy in respect of student welfare, and they acknowledge their responsibility for the overall educational and personal development and well-being of their students.
In the further education sector, if I may mention that for a moment, Further Education Funding Council inspections have shown that, in all but one case from 163 reports, student guidance and support was judged as good or excellent. Given that higher education institutions are independent and autonomous organisations and responsible for their internal affairs, we always find it difficult to justify intervening in what they do and the way in which they do it.
The hon. Gentleman mentioned in passing the possible effect of larger classes. One must tread very carefully in that respect, not only because, if we make comparisons between higher education class sizes in this country and those of our European neighbours, we tend to come out rather better. I know of no comparative work that has been done comparing stress levels in our institutions and those in mainland Europe, but the drop-out rates in mainland Europe are much higher. Moreover, as far as I am aware—I am having this examined—staff-student ratios


there are much higher than ours. The findings also ignore the strides made by technology in dealing with different student numbers in different circumstances.
The hon. Gentleman concluded that it was for the Government to act to alleviate the difficulties in the higher education sector that he had identified. He cited widely differing practices in higher education student support. He then asked for a working party involving the Government, the National Union of Students and the Committee of Vice-Chancellors and Principals to identify good practice, produce publicity and so on. At this point I must differ with him.
I do not think that such action is a matter for the Government—not only because the Government would not naturally become involved in such an area, but because of sensitivities with regard to the relationship between my Department and higher education institutions, with their proud traditions of autonomy and independence. I am somewhat puzzled: this may indeed be natural territory for either the NUS or the CVCP, or perhaps for both those bodies working together, but Government intervention should not be required to initiate the action described by the hon. Gentleman.
Surely, if the NUS shares the hon. Gentleman's concern about its members, it is a matter for it—with all the resources at its disposal, its contacts on campuses and its national network of information—to act in whatever way it chooses. No doubt it would be beneficial if it could involve the CVCP. I fail to see why the case made by the hon. Gentleman should involve the Government.
It is not for me to judge, at this stage, whether the level of stress alleged in the document produced by the hon. Gentleman exists, but I have hinted at my reservations. I refer not only to the use of the term "stress", as we now see it developing throughout society, or to the change in the nature of the higher education student body, but more generally to the extent to which stress is increasing—or perhaps we are more aware of it, or perhaps more people are claiming to experience it—and the extent to which it may vary from one institution to another. Surely all that is natural territory for the NUS and bodies affiliated to it—and perhaps for the CVCP, if it can be encouraged to participate.
I do not want to denigrate or minimise what the hon. Gentleman has said, or to deny that concern exists—as it would in any other part of society. Nor is it for me to suggest—although I am tempted to—that those who are involved in higher education, and are no doubt qualified and proud to be so, should in many ways be better equipped internally to handle the phenomenon of stress. Nevertheless, I feel that this is not a matter for Government.
I hope that the hon. Gentleman accepts my analysis. I am glad that he raised the matter, and we shall want to keep a much closer eye on it. I shall wait with interest to see whether the NUS, the CVCP or any other body will be prepared to take up this important issue as a result of tonight's debate.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes past Ten o'clock.